Iron Company reports the following information about its two divisions, Fabricating and Assembly.: ...
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Accounting
- Iron Company reports the following information about its two divisions, Fabricating and Assembly.:
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| Fabricating Division: |
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| Market price of the subassembly | $ | 50 |
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| Variable cost of the subassembly | $ | 20 |
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| Excess capacity (in units) |
| 1,000 |
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| Assembly Division: |
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| Number of units needed |
| 900 |
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- If the transfer price between the two divisions was to be negotiated, what is the range (high and low) of negotiating prices for the two divisions?
- Explain why the amounts you determined are the negotiating price range.
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