Bramble Electronics operates as a decentralized company. Bramble’s Battery division manufactures batter chargers that are sold both...

80.2K

Verified Solution

Question

Accounting

Bramble Electronics operates as a decentralized company.Bramble’s Battery division manufactures batter chargers that aresold both externally to outside customers and internally to theCamera division. Battery division’s annual capacity is 83,700units. The revenue and costs associated with one battery chargerare as follows:
Selling Price to external customers $21
Variable Cost 13
Fixed Cost (based on capacity) 4

The Camera division would like to purchase 25,110 units of batterychargers; however, Cameron, the manager of the Camera division, isable to purchase the battery charger from an overseas supplier at$19.
Assuming the Battery division operates at 60% capacity, what isthe range of the transfer price, if any, for the battery charger?Cameron has learned that the Battery division operates below itscapacity. He is willing to pay up to $18.50 for a battery charger.Should the Battery division accept the offer at $18.50?

   Minimum ? TP ?
Maximum
The range $___   ? TP ?$_
The Battery division _(should/should not) accept the offerto transfer the battery chargers at $18.50.

Answer & Explanation Solved by verified expert

3.9 Ratings (422 Votes)

Current capacity 60 Total capacity 83700 60 139500 Vacant capacity 139500 83700 54800 units Additional Quantity required 25100 units So the required quantity can be See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Selling Price to external customers		$21
Variable Cost		13
Fixed Cost (based on capacity)		4