The Parts Division of Nydron Corporation makes Part Y6P, which it sells to outside companies...
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Accounting
The Parts Division of Nydron Corporation makes Part Y6P, which it sells to outside companies for $17.00 per unit. According to the cost accounting system, the costs of making one unit of Part Y6P consist of $7.00 for direct materials, $3.00 for direct labor, $4.50 for variable manufacturing overhead, and $1.20 for fixed manufacturing overhead. The Parts Division has enough idle capacity to make 1,000 units of Part Y6P each month. The Assembly Division of Nydron Corporation can use Part Y6P in one of its products. At present, the Assembly Division is purchasing an equivalent part from an outside supplier for $16.85 per unit. The Assembly Division needs 2,000 units of the part each month. It has been suggested that the Assembly Division buy Part Y6P from the Parts Division instead of buying the equivalent part from the outside supplier.
Please calculate the following:
Nydron Parts Division Selling transfer price (rounded to 2 decimal places)
$
Nydron Assembly Division Buying Transfer price (rounded to 2 decimal places)
$
Should the transfer take place (Yes or No)
Answer & Explanation
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