ACC 560 MART Great Stories /acc560mart.com ACC 560 MART Great Stories /acc560mart.com | Page 33

are located in buildings on the same piece of property. The
Board Division has offered the Chip Division $21 per unit to
supply it with chips for 40,000 boards. It has been purchasing
these chips for $22 per unit from outside suppliers. The Chip
Division receives $22.50 per unit for sales made to outside
customers on this type of chip. The variable cost of chips sold
externally by the Chip Division is $14.50. It estimates that it will
save $4.50 per chip of selling expenses on units sold internally
to the Board Division. The Chip Division has no excess
capacity.
Instructions
1. Calculate the minimum transfer price that the Chip
Division should accept. Discuss whether it is in the Chip
Division's best interest to accept the offer.
2.
Suppose that the Chip Division decides to reject the offer.
What are the financial implications for each division, and for
the company as a whole, of this decision?
============================================
ACC 560 Week 5 Quiz 3 (Chapters 5 and 6)
FOR MORE CLASSES VISIT
www.acc560mart.com
ACC 560 Week 5 Quiz 3 (Chapters 5 and 6)
Question 1
A company with a higher contribution margin ratio is
Question 2