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?
The range $_______ ? TP ?$_________
The Battery division _____(should/should not) accept the offerto transfer the battery chargers at $18.50.
