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Exercise 22-14 The Bathtub Division of Kirk Plumbing Corporation has recentlyr approached the Faucet Division with a proposal. The Bathtub Division

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Exercise 22-14 The Bathtub Division of Kirk Plumbing Corporation has recentlyr
approached the Faucet Division with a proposal. The Bathtub Division
would like to make a special "ivorv" tub with gold-plated fixtures for the
companv's SB-vear anniversarv. It would make onlv 4,?00 of these units.
It would like the Faucet Division to make the fixtures and provide them
to the Bathtub Division at a transfer price of $1FB. If sold externally, the
estimated variable cost per unit would be $130. However. by selling
internallv, the Faucet Division would save $8 per unit on variable selling
expenses. The Faucet Division is currentlv operating at full capacity. Its
standard unit sells for $43 per unit and has variable costs of $21 Compute the minimum transfer price that the Faucet Division should be
willing to accept. Should they accept this offer? Their :I this am...

Top Answer

Minimum transfer price = $138 They should... View the full answer

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