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The Carla Vista Company is a multidivisional company. Its managers have full responsibility for prots and complete autonomy to accept or reject transfers frorr other
The Carla Vista Company is a multidivisional company. Its managers have full responsibility for prots and complete autonomy to accept or reject transfers frorr other divisions. Division A produces a sub-assembly part for which there is a competitive market. Division B currently uses this sub-assembly for a nal product that is sold outside at $1,152. Division A charges Division B the market price of $672 per unit of the part. Unit variable costs are $504 and $576 for Divisions A and B, respectively. The manager of Division B feels that Division A should transfer the part at a lower price than market because at market, Division B is unable to make a prot. (a) Calculate Division B's contribution margin if transfers are made at the market price, and calculate the company's total contribution margin. (Enter negative amounts using either a negative sign preceding the number eg. -45 or parentheses eg. (45).) Division B's contribution margin $ Company's total contribution margin $ Assume that Division A can sell only 500 units externally at $672 per unit out of the 1,000 units that it can produce every month. Assume also that a 20% reduction in price is necessary to sell all 1,000 units each month. Should transfers be made? If so, how many units should the division transfer and at what price? (Round price per unit to 1 decimal place, 8.3. 52.7.) units at v
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