Spirit Manufacturing is a division of Crane Communications, Inc. Spirit produces cell phones and sells these phones to other communication companies, as well as to Crane. Recently, the vice president of marketing for Crane approached Spirit with a request to make 25.200 units of a special cell phone that could be used anywhere in the world. The following information is available regarding the Spirit division: Selling price of regular cell phone Variable cost of regular cell phone $126 63 Additional variable cost of special cell phone 51 The marketing vice president offers to pay Spirit $232 per phone. Spirit has no available capacity and would have to forgo sales of 33,200 phones to existing customers to meet this request. Calculate the minimum transfer price.

Spirit Manufacturing is a division of Crane Communications, Inc. Spirit produces cell phones and sells these phones to other communication companies, as well as to Crane. Recently, the vice president of marketing for Crane approached Spirit with a request to make 25.200 units of a special cell phone that could be used anywhere in the world. The following information is available regarding the Spirit division: Selling price of regular cell phone Variable cost of regular cell phone $126 63 Additional variable cost of special cell phone 51 The marketing vice president offers to pay Spirit $232 per phone. Spirit has no available capacity and would have to forgo sales of 33,200 phones to existing customers to meet this request. Calculate the minimum transfer price.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 8E

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