Calculate minimum transfer price.E9.29 (LO 6) The national division of Nero International Company is buying 20,000 widgets from anoutside supplier at $75 per unit. Nero International's overseas division, which is producing and sellingwidgets at full capacity (25,000 units), has the following sales and cost structure:Sales price per unit$90Variable cost per unit70Fixed cost (at capacity) per unit 20Instructionsa. Determine the minimum transfer price if the national division buys 5,000 widgets from the overseasdivision.b. Determine the effect on overall company profits if the overseas division meets the outside supplier'sprice and sells the 5,000 widgets to the national division.

A company may calculate the minimum acceptable transfer price as equal to the variable costs or…

a. Determine the minimum transfer price if the national division buys 5,000 widgets from the overseas division. b. Determine the effect on overall company profits if the overseas division meets the outside supplier's price and sells the 5,000 widgets to the national division.

a. Determine the minimum transfer price if the national division buys 5,000 widgets from the overseas division. b. Determine the effect on overall company profits if the overseas division meets the outside supplier's price and sells the 5,000 widgets to the national division.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 7E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...

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