Word Sheffield is a publishing company with a number of different book lines. Each line has contracts with a number of different authors. The company also owns a printing operation called Quick Press. The book lines and the printing operation each operate as a separate profit center. The printing operation earns revenue by printing books by authors under contract with the book lines owned by Word Sheffield, as well as authors under contract with other companies. The printing operation bills out at $0.01 per page, and a typical book requires 380 pages of print. A manager from Business Books, one of Word Sheffields book lines, has approached the manager of the printing operation offering to pay $0.006 per page for 1,600 copies of a 380-page book. The book line pays outside printers $0.007 per page. The printing operation's variable cost per page is $0.004. Determine whether the printing should be done internally or externally, and the appropriate transfer price, under each of the following situations.

Calculate the change in contribution margin to each division, and to the company as a whole, if top management forces the printing operation to accept the $0.006 per page transfer price when it has no available capacity.

done: no capacity= printing should be done [externally] minimum transfer price [$.01]

done: capacity= printing should be done [internally] minimum transfer price [$.004]

not done:

select an option (Loss) to the printing operation		$enter a dollar amount
select an option (Profit) to the business books		$608
select an option (Loss) to the company		$enter a dollar amount