(Answered)-8.17 The Sattle Automobile Company has j ust acquired a battery division. The com division is...

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8.17          The Sattle Automobile Company has j ust acquired a battery division. The com division is presently purchasing 100,000 batteries each year  from  Bendox  Corpo price of $24 per battery. Through the acquisition of the battery division top mana       feels that t he compa ny's motor division should begin to purchase its batteries fr acquired  ba ttery division. The battery  division 's cost  per battery  is as  follows:   Direct materials $12 Direct labor 4 Variable overhead 2 Fixed overhead 2* Total unit cost $20 *Based on 250.000 u nits of capacity of  the  battery division.   Top ma nagement wishes to decide on the transfer price to be cha rged on the i transfers.   1.      Explain why each of the following would or would n ot be an appropriate tra   (a) $24 (b) $20 (c) $21 (d) $18 2.      Assumi ng that t he battery division is operating at f ull capacity, explain wh transfer prices given in  parts  1(a )  t hrough  1(d )  would  or  would  not  be an price.        

 

Solution ID:10137808 | Question answered on 16-Oct-2016

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