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 $24 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 Division has enough excess capacity to accommodate the request.

Required:

1.

Should the Molding Division accept the $31 transfer price proposed by management?

	No
	Yes

2.	Calculate the effect on Molding Division