the molding division of Cotwold company manufactures a plastic casing used by th
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the molding division of Cotwold company manufactures a plastic casing used by the assembly division. The casing is also sold to external customers for $34 per unit.........
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O ezto.mhe ? Search t Visited my.utrgv.edu ALGEBRALogin Search everything on onnect Instructions help Question 5 (of 10) Save & ExitSubmit Time remaining: 0:51:03 The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to external customers for $34 per unit. Variable costs for the casing are $ 21 per unit and fixed cost is $5 per unit. Cotwold executives would like for the Molding Division to transfer 17,000 units to the Assembly Division at a price of $25 per unit. Assume that the Molding Division is operating at full capacity. Required: 1. Should it accept the transfer price proposed by management? Yes No 2. Identfy the minlmum transfer price that the Molding DIvisIon will accept Chapter 10 test bank_o.. Study Notes 1080 30 29.Explanation / Answer
Solution 1 :
Molding division should not accept the transfer price of $25 as molding division is operating at full capacity and selling the casing at a regular price of $34 per unit. Accepting transfer price of $25 will result in loss of contribution margin on regular sale to molding division.
Solution 2:
Minimum transfer price that molding division should accept is the regular sale price of $34 per unit.
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