Jefferson Company Has Two Divisions: Jefferson Bottles and Jefferson Juice

question 4

Essay

Jefferson Company has two divisions: Jefferson Bottles and Jefferson Juice. Jefferson Bottles makes glass containers, which it sells to Jefferson Juice and other companies. Jefferson Bottles has a capacity of 10 million bottles a year. Jefferson Juice currently has a capacity of 3 million bottles of juice per year. Jefferson Bottles has a fixed cost of $100,000 per year and a variable cost of $0.01/bottle. Jefferson Bottles can currently sell all of its output at $0.03/bottle.
Required:
a. What should Jefferson Bottles charge Jefferson Juice for bottles so that both divisions will make appropriate decentralized planning decisions?
b. If Jefferson Bottles can only sell 5 million bottles to outside buyers, what should Jefferson Bottles charge Jefferson Juice for bottles so that both divisions will make appropriate decentralized planning decisions?

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Definitions:

Inherited Predispositions

Traits, characteristics, or susceptibilities genetically passed from parents to offspring that may influence behavior, health, and development.

Jung's Psychoanalytic Theory

A psychological framework that emphasizes the collective unconscious, archetypes, and the process of individuation.

Collective Unconscious

A term coined by Carl Jung to describe structures of the unconscious mind shared among beings of the same species.

Personal Unconscious

In Jungian psychology, the portion of the unconscious mind containing an individual's thoughts, memories, and feelings that are not readily accessible.