Cominsky Products, Incorporated, Has a Screen Division That Manufactures and Sells

question 130

Essay

Cominsky Products, Incorporated, has a Screen Division that manufactures and sells a number of products, including a standard screen. Data concerning that screen appear below:
The company has a Home Security Division that could use this screen in one of its products. The Home Security Division is currently purchasing 6,000 of these screens per year from an overseas supplier at a cost of $96 per screen.
Required:
Assume that the Screen Division is selling all of the screens it can produce to outside customers. What is the acceptable range, if any, for the transfer price between the two divisions?

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Definitions:

Output Power

The amount of power, typically measured in watts, that a device, system, or process delivers to its load.

Open Delta

An open delta connection refers to a method of transformer connection used in electrical systems that employs two transformers to create a three-phase supply with a smaller capacity than a full delta connection.

Three-Phase Transformer

A type of transformer used in three-phase systems, consisting of three sets of primary and secondary windings, used to step up or step down voltages in power distribution.

Single Phase Loads

Electrical loads operating with a single phase power supply, characterized by the use of two wires: one power wire and one neutral wire.