Vandermeer Products, Inc

question 29

Essay

Vandermeer Products, Inc., has a Antennae Division that manufactures and sells a number of products, including a standard antennae. Data concerning that antennae appear below:
The company has a Aircraft Products Division that could use this antennae in one of its products. The Aircraft Products Division is currently purchasing 11,000 of these antennaes per year from an overseas supplier at a cost of $88 per antennae.
Required:
a. Assume that the Antennae Division is selling all of the antennaes it can produce to outside customers. What is the acceptable range, if any, for the transfer price between the two divisions?
b. Assume again that the Antennae Division is selling all of the antennaes it can produce to outside customers. Also assume that $1 in variable expenses can be avoided on transfers within the company due to reduced shipping and selling costs. What is the acceptable range, if any, for the transfer price between the two divisions?

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Definitions:

Revolutionary Technology

Refers to groundbreaking innovations that significantly alter and improve the way tasks or operations are conducted.

Long-Term Purpose

An overarching goal or objective that guides actions and decisions over an extended period.

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Established rules and recommendations that govern behavior or operations within an organization, ensuring consistency and compliance.

Long-Term Purpose

The overarching goal or mission that guides an individual's or organization's actions over an extended period.