Solution-How did the shuttle division come up

How did the shuttle division come up

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Reference no: EM13513695

The shuttle division of the Tandem Corporation produces circuit boards which are sold to the transistor radio division of the company, as well as to outside buyers. The income statement (in contribution format) for the past year for the division is given below.

	To the Transistor	To Outside
	Radio Divison	Buyers
Sales:
20,000 units at $3.00	$60,000
30,000 units at $4.00		$120,000
Variable expenses:
$1.00	20,000
$2.00		60,000
Contribution margin	$40,000	$ 60,000
Fixed costs	15,000	30,000

An outside supplier has just offered the manager of the transistor radio division to supply the circuit boards at $1.75 each. The manager of the shuttle division would not meet this price, arguing that it costs him $1.75 to manufacture and sell each unit of a circuit board. Assume that no additional sales can be made to outside buyers. Answer the following:

1. How did the shuttle division come up with the $1.75 unit cost figure?

2. Is the shuttle division required to meet the outside price of $1.75 for transistor radio sales?

3. Would you meet the $1.75 outside price if you were the manager of the shuttle division?

Reference no: EM13513695

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How did the shuttle division come up : The shuttle division of the Tandem Corporation produces circuit boards which are sold to the transistor radio division of the company, as well as to outside buyers. The income statement (in contribution format) for the past year for the division i..

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How did the shuttle division come up

Reference no: EM13513695

Reference no: EM13513695

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