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1. The Caplow Company is a multidivisional company, and its managers have been delegated full profit responsibility and complex autonomy to accept or reject transfers from other divisions. Division A produces a subassembly with a ready competitive market. This subassembly is currently used by Division B for a final product that is sold outside at $1,200.Division A charges Division B market price for the subassembly, which is $700 per unit. Variable costs are $520 and $600 for Divisions A and B, respectively. The manager of Division B feels that Division A should transfer the subassembly at a lower price than market because at this price, Division B is unable to make a profit.
1. Compute Division B's profit contribution if transfers are made at the market price, and also the total contribution to profit for the company.
2. Assume that Division A can sell all its production in the open market. Should Division A transfer goods to Division B? If so, at what price?
3. Assume that Division A can sell in the open market only 500 units at $700 per unit out of the 1,000 units that it can produce every month, and that a 20 percent reduction in price is necessary to sell full capacity. Should transfers be made? If so, how many units should it transfer and at what price? Submit a schedule showing comparisons of contribution margins under three different alternatives to support your decision.
The State Opera Theatre gains significant revenue from ticket sales at each opera performed during the season. The sale of souvenir programs for all performances of each opera also adds to profitability.
i just need help not someone to do it for me. i have attached the
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