The Bathtub Division of Monty Plumbing Corporation has recently approached the Faucet Division with a...
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The Bathtub Division of Monty Plumbing Corporation has recently approached the Faucet Division with a proposal. The Bathtub Division would like to make a special "ivory" tub with goldplated fixtures for the company's year anniversary. It would make only of these units. It would like the Faucet Division to make the fixtures and provide them to the Bathtub Division at a transfer price of $ If sold externally, the estimated unit variable cost would be $ However, by selling internally, the Faucet Division would save $ per unit on variable selling expenses. The Faucet Division is currently operating at full capacity. Its standard unit sells for $ per unit and has variable costs of $Compute the minimum transfer price that the Faucet Division should be willing to accept.
The Bathtub Division of Monty Plumbing Corporation has recently approached the Faucet Division with a proposal. The Bathtub Division would like to make a special "ivory" tub with goldplated fixtures for the company's year anniversary. It would make only of these units. It would like the Faucet Division to make the fixtures and provide them to the Bathtub Division at a transfer price of $ If sold externally, the estimated unit variable cost would be $ However, by selling internally, the Faucet Division would save $ per unit on variable selling expenses. The Faucet Division is currently operating at full capacity. Its standard unit sells for $ per unit and has variable costs of $Compute the minimum transfer price that the Faucet Division should be willing to accept.
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