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?

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