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The Motor division of Zenx Inc. Produces motors that can be widely used by manufacturers of various appliances. Sales and cost data on the motors
The Motor division of Zenx Inc. Produces motors that can be widely used by manufacturers of various appliances. Sales and cost data on the motors are as follows: Selling price per unit on the market Variable costs per unit Fixed costs (based on capacity) Annual production capacity in units 340 268 42 120,000 The Appliance division of Zenx Inc. can use the motors in the production of one of its products. The Appliance division will need 10,000 motors per year. It has received a quote of 328 per motor from another manufacturer. Managers of Zenx Inc. are evaluated based on divisional profits. Q1: Assume that the Motor division is selling all the motors it produces to external customers. From the standpoint of the Appliance division, what is the highest acceptable transfer price for motors purchased from the Motors division? Q2: Assume that the Motor division is selling all the motors it produces to external customers. From the standpoint of the entire company,should the internal transfer take place? a.) Yes b.) No c.) It is not clear based on the information available d.) It makes no difference Q3: Assume that the Motor division is selling only 110,000 motors per year to outside customers. From the standpoint of the Appliance division, what is the highest acceptable transfer price for motors purchased from the Motors division? Q4:Assume that the Motor division is selling only 110,000 motors per year to outside customers. From the standpoint of the entire company, should the internal transfer take place? a.) Yes b.) No c.) It is not clear based on the information available d.) It makes no difference
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