The variable costs of the mobile phone division will be incurred whether it buys from the chip division or from an outsi
Posted: Mon May 30, 2022 8:39 am
The variable costs of the mobile phone division will be incurred
whether it buys from the chip division or from an outside
supplier.
a) What is the highest price that the managers of the mobile
phone division would want to pay the chip division for the chip?
Explain.
b) If the chip division is working at full capacity and
cannot produce additional units, what transfer price for the chip
would be best for the entity as a whole? Explain.
c) If the chip division is not operating at capacity and has no
prospect of reaching capacity, what is the lowest price its
managers would typically be willing to sell chips to the mobile
phone division?
whether it buys from the chip division or from an outside
supplier.
a) What is the highest price that the managers of the mobile
phone division would want to pay the chip division for the chip?
Explain.
b) If the chip division is working at full capacity and
cannot produce additional units, what transfer price for the chip
would be best for the entity as a whole? Explain.
c) If the chip division is not operating at capacity and has no
prospect of reaching capacity, what is the lowest price its
managers would typically be willing to sell chips to the mobile
phone division?