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The Post Division of the MT Woodhead Company produces basic posts that can be sold to outside cusomters or sold to the Lamp Division of
The Post Division of the MT Woodhead Company produces basic posts that can be sold to outside cusomters or sold to the Lamp Division of MT Woodhead. Last year, the Lamp Division bought all of its 25,000 posts from an outside supplier for $1.55/post. Data below relates to the Post Division Capacity in units: 300,000 posts Selling Price per Post to Outside Customers $1.75 Variable costs per Post 0.90 Fixed Costs -total $150,000 Note that the total Fixed Costs would be the same for all alternatives shown below: a) Suppose there is ample capacity so that transfers of posts to the Lamp Division do not cut into sales to outside customers. Calculate the range of highest & lowest transfer prices that would allow transfers to take place between the 2 Divisions Highest transfer price Lowest transfer price
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