The Following Information Is Available for the Two Divisions of MAC

question 118

Essay

The following information is available for the two divisions of MAC Co.: $$\begin{array} { | l | r | } \hline \text { Division } A & \\\hline \text { Selling price to outside market } & \$ 55 \\\hline \text { Standard unit-level costs } & 35 \\\hline \text { Dwision B } & \\\hline \text { Selling price of finished product } &\$95 \\\hline \text { Standard unit-level costs for Division B } &2 5 \\\hline\end{array}$$
Division A has no excess production capacity.Required:
1)In order to ensure the best use of the productive capacity of A,what transfer price should be set by Division A and what effect does this transfer price have on the overall margin for the company? Is the answer goal congruent under the general rule?
2)Should Division B accept a special order for its product if the selling price is reduced to $70.Use your answer from #1 and explain.3)Would your answer to #2 change if Division A had excess capacity? Explain.

---

Definitions:

Intervention Strategies

Plans of action implemented to address specific challenges, needs, or objectives, often within therapeutic, educational, or organizational contexts.

Universal Human Behavior Theory

A theoretical framework suggesting that there are common patterns of behavior exhibited by all humans across cultures and societies, influenced by genetic, environmental, and psychological factors.

Physical Conditions

Physical conditions refer to the state of an individual's bodily health, including any diseases, disorders, or injuries affecting the physical body.

Potential Value

The inherent worth or future benefits that something holds, which may not be realized or utilized at the present moment.