Magnificent Motor Corporation
The Engine Division of Magnificent Motor Corporation uses 5,000 carburetors per month in its production of automotive engines.It presently buys all of the carburetors it needs from two outside suppliers at an average cost of $100.The Carburetor Division of Magnificent Motor Corporation manufactures the exact type of carburetor that the Engine Division requires.The Carburetor Division is presently operating at its capacity of 15,000 units per month and sells all of its output to a foreign car manufacturer at $106 per unit.Its cost structure (on 15,000 units)is:
Variable prochuction costs $70
Variable selling costs 10
All fixed costs 10
Assume that the Carburetor Division would not incur any variable selling costs on units that are transferred internally.
Refer to Magnificent Motor Corporation.What is the maximum of the transfer price range for a transfer between the two divisions?
A)$106
B)$100
C)$90
D)$70

Question

Magnificent Motor Corporation
The Engine Division of Magnificent Motor Corporation uses 5,000 carburetors per month in its production of automotive engines.It presently buys all of the carburetors it needs from two outside suppliers at an average cost of $100.The Carburetor Division of Magnificent Motor Corporation manufactures the exact type of carburetor that the Engine Division requires.The Carburetor Division is presently operating at its capacity of 15,000 units per month and sells all of its output to a foreign car manufacturer at $106 per unit.Its cost structure (on 15,000 units)is:
Variable prochuction costs                  $70
Variable selling costs                             10
All fixed costs                                        10
Assume that the Carburetor Division would not incur any variable selling costs on units that are transferred internally.
Refer to Magnificent Motor Corporation.What is the maximum of the transfer price range for a transfer between the two divisions?
A)$106
B)$100
C)$90
D)$70

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The Answer of Magnificent Motor Corporation
The Engine Division of Magnificent Motor Corporation uses 5,000 carburetors per month in its production of automotive engines.It presently buys all of the carburetors it needs from two outside suppliers at an average cost of $100.The Carburetor Division of Magnificent Motor Corporation manufactures the exact type of carburetor that the Engine Division requires.The Carburetor Division is presently operating at its capacity of 15,000 units per month and sells all of its output to a foreign car manufacturer at $106 per unit.Its cost structure (on 15,000 units)is:
Variable prochuction costs                  $70
Variable selling costs                             10
All fixed costs                                        10
Assume that the Carburetor Division would not incur any variable selling costs on units that are transferred internally.
Refer to Magnificent Motor Corporation.What is the maximum of the transfer price range for a transfer between the two divisions?
A)$106
B)$100
C)$90
D)$70

Magnificent Motor Corporation The Engine Division of Magnificent Motor Corporation Uses 5,000 Carburetors