Solution-What would be the impact on diomedes s corporation

What would be the impact on diomedes s corporation income

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Reference no: EM132809235

Division A of Diomedes S. Corporation produces part CF37 that it sells to outside customers for $42 a unit. Division B of Diomedes S. Corporation uses part CF37 as a component in one of its products. Division B currently buys part CF37 from an outside supplier for $38 a unit.

Division A's annual production capacity of part CF37 is 80,000 units and the variable cost of part CF37 is $18 per unit and the fixed cost is $17 per unit. Currently, Division A has a demand from outside customers for 35,000 units of part CF37, and Division B's current needs are for 17,700 units of part CF37.

Problem 1: If Division B would agree to buy part CF37 from Division A rather than buying it from the outside supplier and the division managers agreed to a transfer price of $24 per unit, what would be the impact on Diomedes S. Corporation's income?

Reference no: EM132809235

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What would be the impact on diomedes s corporation income

Reference no: EM132809235

Reference no: EM132809235

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