Question
The Lakers Co. and the Warriors Co. are both subsidiary companies owned by the NBA Jam Co. The Lakers Co. makes a product called the
The Lakers Co. and the Warriors Co. are both subsidiary companies owned by the NBA Jam Co. The Lakers Co. makes a product called the Brick with a variable cost per unit of $9 and total fixed expenses of $400,000. The Lakers Co. can sell the product to other companies for $18. The Lakers Co. has a capacity of 10,000 units, but is currently selling 9,100 units to outside companies (thus, there is idle capacity of 900 units). The Warriors Co. uses the Brick in one of its products called the Championship. The Warriors Co. can buy the Brick from an outside company for $16 per unit. If the Warriors Co. needs 2,000 units of the Brick, what would be the range of acceptable transfer prices between the Lakers Co. and the Warriors Co.?
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