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

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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 85%capacity, what is the range of the transfer price, if any, for thebattery charger? Cameron has learned that the Battery divisionoperates below its capacity. He is willing to pay up to $18.50 fora 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 offer to transfer the batterychargers at $18.50.

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4.4 Ratings (868 Votes)

given that annual capacity 83700 units variable cost 13 operators capacity 85 total capacity annual capacity operators capacity 83700 85 98470 rounded off vacant capacity total capacity annual capacity 98470 See Answer

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