Marble Countertops and Cabinet Manufacturing produces marble inserts to accommodate the marble countertops. The Marble Division can use the MAR1 insert that is manufactured in the company's Cabinet Division because there is excess capacity. The standard market price to produce the MAR1 insert is $1,400. The managerial accountant reported the following manufacturing cost and variable expense information:
What is the highest price that Marble Countertops and Cabinet Manufacturing should pay in the outside market? What is the lowest acceptable transfer price to the Cabinet Division? What would happen if the managerial accountant produced the part below the acceptable transfer price?

Question

Marble Countertops and Cabinet Manufacturing produces marble inserts to accommodate the marble countertops. The Marble Division can use the MAR1 insert that is manufactured in the company's Cabinet Division because there is excess capacity. The standard market price to produce the MAR1 insert is $1,400. The managerial accountant reported the following manufacturing cost and variable expense information:
  What is the highest price that Marble Countertops and Cabinet Manufacturing should pay in the outside market? What is the lowest acceptable transfer price to the Cabinet Division? What would happen if the managerial accountant produced the part below the acceptable transfer price?

Quizplus · Accepted Answer

The Answer of Marble Countertops and Cabinet Manufacturing produces marble inserts to accommodate the marble countertops. The Marble Division can use the MAR1 insert that is manufactured in the company's Cabinet Division because there is excess capacity. The standard market price to produce the MAR1 insert is $1,400. The managerial accountant reported the following manufacturing cost and variable expense information:
  What is the highest price that Marble Countertops and Cabinet Manufacturing should pay in the outside market? What is the lowest acceptable transfer price to the Cabinet Division? What would happen if the managerial accountant produced the part below the acceptable transfer price?

Marble Countertops and Cabinet Manufacturing Produces Marble Inserts to Accommodate