The Engine Division of the Taylor Corporation sells small engines to the outside

Question

The Engine Division of the Taylor Corporation sells small engines to the outside market at a selling price of $146 per engine. The Engine Division is currently operating at a capacity of 49286 engines per year and is currently selling 36149 engines annually. The variable cost of producing an engine is $109. The Snowmobile Division of the Taylor Corporation currently purchases 18738 engines from an external supplier at a cost of $143 per engine.

What is the maximum transfer price for a transfer of 18738 engines from the Engine Division to the Snowmobile Division?

Select one:

a. $143.00

b. $120.06

c. $109.00

d. $134.94

Explanation / Answer

Answer:

the maximum transfer price =$143

Explanation to the answer:

the maximum transfer price for a transfer of 18738 engines from the Engine Division to the Snowmobile Division is price at which Snowmobile Division buy the product form outside supplier

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