Shalom Department makes a part that it sells to customers outside of the company. Data concerning this part appear below: 75 55 Selling price to outsiders Variable cost per unit Total fixed costs Capacity in units Peace Department of the same company would like to use the part manufactured by Shalom Department in one of its products. Peace Department currently purchases a similar part made by an outside company for P70 per unit and would substitute the part made by Shalom Department. Peace Department requires 5,000 units of the part each period. Shalom Department has ample excess capacity to handle all of Peace Department's needs without any increase in fixed costs and without cutting into outside sales of the part. What is the lowest acceptable transfer price from the standpoint of the selling division? 400,000 25,000

Shalom Department makes a part that it sells to customers outside of the company. Data concerning this part appear below: 75 55 Selling price to outsiders Variable cost per unit Total fixed costs Capacity in units Peace Department of the same company would like to use the part manufactured by Shalom Department in one of its products. Peace Department currently purchases a similar part made by an outside company for P70 per unit and would substitute the part made by Shalom Department. Peace Department requires 5,000 units of the part each period. Shalom Department has ample excess capacity to handle all of Peace Department's needs without any increase in fixed costs and without cutting into outside sales of the part. What is the lowest acceptable transfer price from the standpoint of the selling division? 400,000 25,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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