50 and 51 use the following information: TEB, Inc., which manufactures video games, consists of two divisions, each operating as a profit center. Division A makes a component that is needed by Division B; however, if the price from Division A is too high, Division B has indicated it would purchase the component from an outside supplier. Additional information related to the divisions is: Division Bâs annual needs for component 10,000 units Division As variable cost per unit $150 Division Aâs annual fixed cost $1,500,000 Price per unit from outside supplier $160 Assume Division A sells units to outsiders for $170 each and has over 10,000 units of excess capacity which it cannot use to sell components to outsiders. Also assume both divisions know the overall company will save money by producing the units internally and transferring them from Division A to Division B. 50. The most logical minimum acceptable transfer price is __________? 51. The most logical maximum acceptable transfer price is __________?. Division A makes a component that is needed by Division B; however, if the price from Division A is too high, Division B has indicated it would purchase the component from an outside supplier. Additional information related to the divisions is: Division Bâs annual needs for component 10,000 units Division As variable cost per unit $150 Division Aâs annual fixed cost $1,500,000 Price per unit from outside supplier $160 Assume Division A sells units to outsiders for $170 each and has over 10,000 units of excess capacity which it cannot use to sell components to outsiders. Also assume both divisions know the overall company will save money by producing the units internally and transferring them from Division A to Division B. 50. The most logical minimum acceptable transfer price is __________? 51. The most logical maximum acceptable transfer price is __________?
50 and 51 use the following information: TEB,
Inc., which manufactures video games, consists of two divisions, each operating as a profit center. Division A makes a component that is needed by Division B; however, if the price from Division A is too high, Division B has indicated it would purchase the component from an outside supplier. Additional information related to the divisions is:
Division Bâs annual needs for component 10,000 units
Division As variable cost per unit $150
Division Aâs annual fixed cost $1,500,000
Price per unit from outside supplier $160
Assume Division A sells units to outsiders for $170 each and has over 10,000 units of excess capacity which it cannot use to sell components to outsiders. Also assume both divisions know the overall company will save money by producing the units internally and transferring them from Division A to Division B.
50. The most logical minimum acceptable transfer price is __________?
51. The most logical maximum acceptable transfer price is __________?
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