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 $35
The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to external customers for $35 per unit. Variable costs for the casing are $22 per unit and fixed cost is $5 per unit. Cotwold executives would like for the Molding Division to transfer 18,000 units to the Assembly Division at a price of $23 per unit. Assume that the Molding Division has enough excess capacity to accommodate the request. Required: 1. Should the Molding Division accept the $23 transfer price proposed by management? No Yes 2. Calculate the effect on Molding Division?s net income if it accepts the $23 transfer price
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