Vandermeer Products, Incorporated, Has a Antennae Division That Manufactures and Sells

question 45

Essay

Vandermeer Products, Incorporated, 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:

Psychoses

A severe mental disorder in which thought and emotions are so impaired that contact is lost with external reality.

Distorted Perceptions

Altered or inaccurate interpretations of sensory information, which can occur due to various psychological conditions.

Impaired Functioning

A reduction in the ability to perform or operate normally, often due to physical or psychological conditions.

Dissociative Identity Disorder

A severe form of dissociation, a mental process which produces a lack of connection in a person's thoughts, memory, and sense of identity.