Exercise 22-16 (Part Level Submission) Crede Inc. has two divisions. Division A

Question

Exercise 22-16 (Part Level Submission) Crede Inc. has two divisions. Division A makes and sells student desks. Division B manufactures and sells reading lamps Each desk has a reading lamp as one of its components. Division A can purchase reading lamps at a cost of $10.00 from an outside vendor. Division A needs 10,100 lamps for the coming year. Division B has the capacity to manufacture 49,400 lamps annually. Sales to outside customers are estimated at 39,300 lamps for the next year. Reading lamps are sold at$ 11.65 each. Variable costs are 6.63 per lamp and include 1.37 of variable sales costs that are not incurred if lamps are sold internally to Division A. The total amount of fixed costs for Division B is $ 78,100 Consider the following independent situations ? (a) What should be the minimum transfer price accepted by Division B for the 10,100 lamps and the maximum transfer price paid by Division A? (Round answers to 2 decimal places, e.g. 10.50 Minimum transfer price accepted by Division B s per unit Maximum transfer price paid by Division A per unit LINK TO TEXT VIDEO: SIMILAR EXERCISE

Explanation / Answer

Minimum transfer price accepted by Division B 5.26 =6.63-1.37 Maximum transfer price paid by Division A 10

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