The Machining Division Makes a Component Part That the Assembly

question 4

Essay

The Machining division makes a component part that the Assembly division needs for a new product.The Machining division's variable cost of manufacturing the component is $25 per
a.Calculate the cost-based transfer price that the Machining division should charge the Assembly division.
b.Calculate the market-based transfer price that the Machining division should charge the Assembly division.
c.What arguments would the Machining division's manager and the Assembly division's manager make in an attempt to get the price each wants?

---

Definitions:

External Jugular

Refers to the external jugular vein, which runs superficially in the neck and drains blood from the head and neck.

Femoral Vein

A major blood vessel in the thigh that carries deoxygenated blood from the lower limb back to the heart.

Subclavian

Relating to the area beneath the clavicle (collarbone), particularly regarding vessels and nerves in that region.

Subcutaneous Tissue

The layer of tissue found directly under the skin, primarily consisting of fat and connective tissues that cushion and insulate the body.