QUESTION 1 Baldwin Corp. manufactures RD34 in its Webb Division. This output is...
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QUESTION 1 Baldwin Corp. manufactures RD34 in its Webb Division. This output is sold to the Roberts Division as raw material in Robert's product. Webb also further processes the RD34 into RD35, and then sells it to other companies. The Webb Division's variable costs for the basic ingredient are \$15 per unit. The Robert Division's variable costs are $5 per unit in addition to what it pays the Webb Division. The Roberts Division has a capacity of 400,000 units and it can sell everything it produces. The market price for the finished additive is $40 per unit. If the Webb Division converts the RD34 into RD35, it can receive $25 per unit on the open market, but it incurs an additional $4 per unit for this processing. Required: a. What is the lowest price the Webb Division should be willing to transfer RD34 to the Roberts Division, assuming the Webb Division is not at full capacity? b. What is the lowest price the Webb Division should be willing to transfer RD34 to the Roberts Division, assuming the Webb Division is at full capacity
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QUESTION 1 Baldwin Corp. manufactures RD34 in its Webb Division. This output is sold to the Roberts Division as raw material in Robert's product. Webb also further processes the RD34 into RD35, and then sells it to other companies. The Webb Division's variable costs for the basic ingredient are \$15 per unit. The Robert Division's variable costs are $5 per unit in addition to what it pays the Webb Division. The Roberts Division has a capacity of 400,000 units and it can sell everything it produces. The market price for the finished additive is $40 per unit. If the Webb Division converts the RD34 into RD35, it can receive $25 per unit on the open market, but it incurs an additional $4 per unit for this processing. Required: a. What is the lowest price the Webb Division should be willing to transfer RD34 to the Roberts Division, assuming the Webb Division is not at full capacity? b. What is the lowest price the Webb Division should be willing to transfer RD34 to the Roberts Division, assuming the Webb Division is at full capacity 