Question
The company Azinheira, Lda have two divisions, the Division A and the Division B. Division B monthly purchase 10.000 units to Division A, using as
The company Azinheira, Lda have two divisions, the Division A and the Division B. Division B monthly purchase 10.000 units to Division A, using as PTI total cost plus 5%. It is also known that the fixed costs incurred corresponding to 33% of total cost. However, the Division A modernized its production equipment and wants to increase the PTI to 18 euros/units. The manager of Division B argues that it cannot support the new value as this would lower their results to close to zero. Alternatively, the Division B can buy to an external supplier for 16,5 euros/ unit., benefiting in this case a 45-day payment (cost of capital opportunity is 4% / quarter). The Division A has no alternative use for this material. Request:Setting a price range for this transaction
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started