Shining Springs Glass Art manufactures various glass art fixtures, including a dolphin-glass figurine. The dolphin-glass figurine is produced in the Design Department and it uses a glass insert that is produced also in the Production Department. The market price for the glass insert is $900. The plant has excess capacity and the managerial accountant reported the following information:
What is the lowest acceptable in-house transfer price to the Production Department? What is the highest acceptable transfer price the Design Department should pay the Production Department to produce the insert in-house?? What should the managerial accountant understand if there was not access capacity at the plant to produce the insert?

Question

Shining Springs Glass Art manufactures various glass art fixtures, including a dolphin-glass figurine. The dolphin-glass figurine is produced in the Design Department and it uses a glass insert that is produced also in the Production Department. The market price for the glass insert is $900. The plant has excess capacity and the managerial accountant reported the following information:
  What is the lowest acceptable in-house transfer price to the Production Department? What is the highest acceptable transfer price the Design Department should pay the Production Department to produce the insert in-house?? What should the managerial accountant understand if there was not access capacity at the plant to produce the insert?

Quizplus · Accepted Answer

The Answer of Shining Springs Glass Art manufactures various glass art fixtures, including a dolphin-glass figurine. The dolphin-glass figurine is produced in the Design Department and it uses a glass insert that is produced also in the Production Department. The market price for the glass insert is $900. The plant has excess capacity and the managerial accountant reported the following information:
  What is the lowest acceptable in-house transfer price to the Production Department? What is the highest acceptable transfer price the Design Department should pay the Production Department to produce the insert in-house?? What should the managerial accountant understand if there was not access capacity at the plant to produce the insert?

Shining Springs Glass Art Manufactures Various Glass Art Fixtures, Including