Reference no: EM132552784
Hamble Product Co. has Division One which makes and sells standard valves as follows:
Capacity in units of 100,000
The selling price for outside customers is IDR 30,000
Variable cost per unit of 16,000
Fixed costs per unit (based on capacity) IDR 9,000
The company has Division Two which can use the valve in making one of its pumps. At present Division Two buys 10,000 valves per year from foreign suppliers at a price of Rp 29,000 per valve.
Requested:
Question 1: What is the transfer price range
a. Assume division One has unemployed capacity
b. Assume division One sells all of its valves to outside customer