Answered step by step
Verified Expert Solution
Link Copied!

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 $26

image text in transcribed
The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to external customers for $26 per unit. Variable costs for the casing are $12 per unit and fixed cost is $3 per unit. Cotwold executives would like for the Molding Division to transfer 9,000 units to the Assembly Division at a price of $18 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 $21. Required: 1. Should the Molding Division accept the $18 transfer price proposed by management? Yes No 2. Determine the minimum transfer price thet it willccect S21 ice 3. Determine the mutually beneficial transfer price so that the two divisions equaily split the profts from the transfer. (Round your answer to 2 decimal places.) utually Beneficial Transfer Price in

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions