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The Machining Division has a capacity of 2,000 units. Its sales and cost data are: Selling price per unit Variable manufacturing costs per unit Variable
The Machining Division has a capacity of 2,000 units. Its sales and cost data are: Selling price per unit Variable manufacturing costs per unit Variable administrative costs per unit Total fixed manufacturing overhead $100 $20 $5 $20,000 Total fixed administrative costs $5,000 A) The Machining Division is currently selling 1,900 units to outside customers, and the Assembly Division wants to purchase 300 units from Machining. If the transaction takes place, the variable administrative costs per unit on the units transferred to Assembly will be $2/unit, not $5/unit. What would the optimal per unit transfer price be? B.) Assembly Division is currently buying from an outside supplier at $98 per unit. It Assembly bought the units from Machining at the optimal transfer price instead, by how much would overall company profits increase/decrease
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