The Uniforms Division of Baseball Company has just revised its actual cost data for 2016. Uniforms Division transfers goods to the Sport Division. Sport Division can buy the same goods in the open market for $122 each. Uniforms's new cost data are as follows:
Current production is 200,000 units, and the Uniforms Division has a capacity of 300,000 units.
Required:
a. What is the lowest price the Uniforms Division should charge for the internal transfers of its goods?
b. What is the highest price the Sport Division should pay for the units?
c. Give the primary reason why the Uniforms Division should reduce its price.

Question

The Uniforms Division of Baseball Company has just revised its actual cost data for 2016. Uniforms Division transfers goods to the Sport Division. Sport Division can buy the same goods in the open market for $122 each. Uniforms's new cost data are as follows:
  Current production is 200,000 units, and the Uniforms Division has a capacity of 300,000 units.
Required: 
a. What is the lowest price the Uniforms Division should charge for the internal transfers of its goods?
b. What is the highest price the Sport Division should pay for the units?
c. Give the primary reason why the Uniforms Division should reduce its price.

Quizplus · Accepted Answer

The Answer of The Uniforms Division of Baseball Company has just revised its actual cost data for 2016. Uniforms Division transfers goods to the Sport Division. Sport Division can buy the same goods in the open market for $122 each. Uniforms's new cost data are as follows:
  Current production is 200,000 units, and the Uniforms Division has a capacity of 300,000 units.
Required: 
a. What is the lowest price the Uniforms Division should charge for the internal transfers of its goods?
b. What is the highest price the Sport Division should pay for the units?
c. Give the primary reason why the Uniforms Division should reduce its price.

The Uniforms Division of Baseball Company Has Just Revised Its