For (3)-(6) below, assume that the Pulp Division is currently selling only 64,00

Question

For (3)-(6) below, assume that the Pulp Division is currently selling only 64,000 tons of pulp each year to outside customers at the stated $22 price. 3a. What is the minimum transfer price for Pulp Division? Minimum transfer price 3-b. What is the range of transfer price the manager's of both divisions should agree? (Round your answers to 2 decimal places.) The lowest transfer price would be and the highestftansfer price would be and the highestitransfer price would be 3-c. Are the managers of the Carton and Pulp Divisions likely to voluntarily agree to a transfer price for 31,000 tons of pulp next year? Yes No 4-a. Suppose that the Carton Division's outside supplier drops its price (net of the purchase discount) to only $17 per ton. Should the Pulp Division meet this price? Yes No

Explanation / Answer

3.a

3.b.

3.c Yes.

4-a. Yes

5. No.

6.

Minimum Transfer Price $ 12.00

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