Starcic Products, Incorporated, has a Connector Division that manufactures and sells a number of products, including a standard connector. Data concerning that connector appear below:
The company has a Transmission Division that needs 6,000 special heavy-duty connectors per year. The Connector Division's variable cost to manufacture and ship this special connector would be $62 per unit. Making these special connectors would require more manufacturing resources. Therefore, the Connector Division would have to reduce its production and sales of regular connectors to outside customers from 45,000 units per year to 38,400 units per year.
Required:
As far as the Connector Division is concerned, what is the lowest acceptable transfer price for the special connectors?
Definitions:
Marginal Product
The additional output that results from using one more unit of a particular input, while holding other inputs constant.
Average Product
The output produced per unit of input, calculated by dividing total output by the number of units of a specific input.
Marginal Product
The boost in output stemming from an increment in input by one unit.
Wage
The payment received by workers for their labor, typically expressed as an amount per hour or per year.
Q20: Eaglin Company's quality cost report is to
Q57: Cabell Products is a division of a
Q75: Luma Incorporated has provided the following data
Q158: Gama Avionics Corporation has developed a new
Q179: Phann Corporation manufactures one product. It does
Q210: The following labor standards have been established
Q239: BR Company has a contribution margin of
Q248: Gauntlett Incorporated reported the following results from
Q314: Financial data for Beaker Company for last
Q393: Held Incorporated makes a single product--an electrical