This Website Has Been Moved to a New Link


Loading

P8-6A Comm Devices (CD)

Price: $2.50


Comm Devices (CD) is a division of Worldwide Communications, Inc. CD produces
pagers and other personal communication devices. These devices are sold to other
Worldwide divisions, as well as to other communication companies. CD was recently
approached by the manager of the Personal Communications Division regarding a request
to make a special pager designed to receive signals from anywhere in the world. The
Personal Communications Division has requested that CD produce 12,000 units of this
special pager. The following facts are available regarding the Comm Devices Division.

Selling price of standard pager  $95
Variable cost of standard pager  $50
Additional variable cost of special pager  $30

Instructions
For each of the following independent situations, calculate the minimum transfer price, and
determine whether the Personal Communications Division should accept or reject the offer.

(a) The Personal Communications Division has offered to pay the CD Division $105 per
pager. The CD Division has no available capacity. The CD Division would have to forgo
sales of 10,000 pagers to existing customers in order to meet the request of the Personal
Communications Division.

(b) The Personal Communications Division has offered to pay the CD Division $150 per
pager. The CD Division has no available capacity. The CD Division would have to forego
sales of 16,000 pagers to existing customers in order to meet the request of the Personal
Communications Division.

(c) The Personal Communications Division has offered to pay the CD Division $100 per
pager. The CD Division has available capacity.

No comments:

Post a Comment