Whitney Company treats each division as a profit center and expects a 20 percent profit on its total production costs.Division A produces a part that it sells externally for $19.00.It also supplies this part to other internal divisions.Its production cost for the part is $13.70.
-Using a negotiated-price approach,what is the negotiation ceiling?

Question

Quizplus · Accepted Answer

The negotiation ceiling is the external sale price of $19.00, as this is the maximum price the internal divisions would be willing to pay before opting to purchase the part externally.

Whitney Company Treats Each Division as a Profit Center and Expects