Figure 5
Allied Industries has two divisions: the Bradley Division and the Rommel Division. Information about the component that the Bradley Division produces is as follows:
The Bradley Division can produce up to 12,000 components per year. The Rommel Division needs 800 units of the component for a product it manufactures
-.Refer to Figure 5. The minimum transfer price that the Bradley Division would be willing to accept is

Question

Quizplus · Accepted Answer

The minimum transfer price that the Bradley Division would be willing to accept is £80 because it is better for them to produce and sell the component at that price rather than transferring it to the Rommel Division for a lower price. Any price lower than £80 would result in the Bradley Division losing money on the transaction. Therefore, £80 is the best choice.

Figure 5 Allied Industries Has Two Divisions: the Bradley Division and the and the Rommel