Division A has no excess production capacity. Required:
1) In order to ensure the best use of the productive capacity of A, what transfer price should be set by Division A and what effect does this transfer price have on the overall margin for the company? Is the answer goal congruent under the general rule?
2) Should Division B accept a special order for its product if the selling price is reduced to $70. Use your answer from 1 and explain.
3) Would your answer to 2 change if Division A had excess capacity? Explain.
The following information is available for the two divisions of CPAECON Co.:

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The Answer of Division A has no excess production capacity. Required:
1) In order to ensure the best use of the productive capacity of A, what transfer price should be set by Division A and what effect does this transfer price have on the overall margin for the company? Is the answer goal congruent under the general rule?
2) Should Division B accept a special order for its product if the selling price is reduced to $70. Use your answer from 1 and explain.
3) Would your answer to 2 change if Division A had excess capacity? Explain.
The following information is available for the two divisions of CPAECON Co.:

Division a Has No Excess Production Capacity. Required