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Tiger Inc. has two autonomous wo autonomous divisions. A Division produces a technical component and its capacity is 10 000 ... any is 10.000 units
Tiger Inc. has two autonomous wo autonomous divisions. A Division produces a technical component and its capacity is 10 000 ... any is 10.000 units annually. Currently. A Division sells its product at a sale price of $190 per unit to external customers. Costs per unit of A Division: Prime costs MOH variable Fixed MOH Marketing variable expenses $50.00 $40.00 $30.00 $20.00 B Division could use the technical component in the manufacturing of its computer products for next year. Variable selling expenses on sales between divisions are reduced by 40%. Alternatively, the B Division could buy this component from a Chinese supplier for $120 per unit. In addition, B Division would have to pay customs duties of $10 per unit on imported components. 3) Ignore questions 1 and 2 above. Assume Division A operates at 90% of its capacity and all the production could be sold to external customers. Division B needs 2,000 units of the technical component. 3.a) what is the range of acceptable transfer prices? .................. 3.b) will the transfers occur between the divisions? Why? ....... 3.c) Assume the transfers occur between the two divisions at $132 transfer price. Calculate the impact on operating income of each division
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