Brown Industries Has Two Divisions: the Hank Division and the Murray

question 45

Essay

Brown Industries has two divisions: the Hank Division and the Murray Division. Information about a component that the Hank Division produces is as follows:
The Hank Division can produce up to 22,000 components per year. The Murray Division needs 1,000 units of the component for a product it manufactures.
Required:

a.
Determine the minimum transfer price that the selling division would be willing to accept.
b.
Determine the maximum transfer price that the buying division would be willing to pay.
c.
If the Hank Division did not have excess capacity, what would be the correct transfer price?

---

Definitions:

Procedure

A series of actions conducted in a certain order or manner to achieve a desired result or perform a particular task.

Condition

A particular state of someone or something, especially regarding their physical or medical state.

Disease

A disorder of structure or function in a human, animal, or plant, especially one that produces specific signs or symptoms or that affects a specific location.

Plural

The form of a noun or verb that is used to indicate more than one, such as "cats" for more than one cat.