The Molding Division of Cotwold Company manufactures a plastic casing used by th

Question

The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division This casing is also sold to external customers for $25 per unit. Variable costs for the casing are $12 per unit and fixed cost is $3 per unit. Cotwold executives would like for the Molding Division to transfer 8,000 units to the Assembly Division at a price of $18 per unit. Assume that Molding Division is operating at full capacity Required: 1. Should it accept the transfer price proposed by management? O Yes No 2. Identify the minimum transfer price that the Molding Division will accept Hints References eBook & Resources Hint#1 Type here to search

Explanation / Answer

1 No 2 Minimum price = $25

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