Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to external customers for $37
The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to external customers for $37 per unit. Variable costs for the casing are $12 per unit and fixed cost is $5 per unit Cotwold executives would like for the Molding Division to transfer 20,000 units to the Assembly Division at a price of $31 per unit. Assume that the Molding Department has excess capacity, but the Assembly Department requires the casing to be made from a specific blend of plastics. This would raise the variable cost per unit to $33. Required: 1. Should the Molding Division accept the $31 transfer price proposed by management? O No Yes 2. Detine the minimum transfer price that it will accept imu m Transfer Price 3. Determine the mutually beneficial transfer price so that the two divisions equally split the profits from the transfer. (Round your answer to 2 decimal places.) ually Beneficial Transfer Price
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered 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