Solution-Calculate lowest price division a would be willing

Calculate lowest price division a would be willing to accept

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Reference no: EM132510587

Arian International Corporation has two divisions, Division A and Division B. Division A produces a motor that sells for $95 per unit, with the following costs based on its capacity of 183,000 units:

Direct materials$29

Direct labour24

Variable overhead7

Fixed overhead8

Division A is operating at 70% of normal capacity and Division B is purchasing 22,500 units of the same component from an outside supplier for $89 per unit.

Question A) Calculate the benefit, if any, to Division A in selling to Division B the 22,500 units at the outside supplier's price.

Question B) Calculate the lowest price Division A would be willing to accept.

Question c) If Division A is operating at full capacity, what would be the lowest transfer price that it is willing to accept?

Reference no: EM132510587

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Calculate lowest price division a would be willing to accept

Reference no: EM132510587

Reference no: EM132510587

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