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The Following Information Is Available for the Two Divisions of MAC

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The following information is available for the two divisions of MAC Co.:  Division A Selling price to outside market $55 Standard unit-level costs 35 Dwision B  Selling price of finished product $95 Standard unit-level costs for Division B 25\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.

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Definitions:

Symptoms

Signs or indications of a disease or condition experienced by an individual.

Away From

A phrase indicating movement or direction leading from a specific point or location.

Middle

Being at a point or position equally distant from the sides, edges, or ends; centrally located.

Abnormal

Deviating from what is normal or usual, typically in a way that is undesirable or worrying.

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