Essay
Lank Products,Inc.,has a Transmitter Division that manufactures and sells a number of products,including a standard transmitter.Data concerning that transmitter appear below:
The company has a Remote Devices Division that could use this transmitter in one of its products.The Remote Devices Division is currently purchasing 11,000 of these transmitters per year from an overseas supplier at a cost of $53 per transmitter.
Required:
The Transmitter Division is selling all of the transmitters it can produce to outside customers.Also assume that $6 in variable expenses can be avoided on transfers within the company due to reduced shipping and selling costs.What is the acceptable range,if any,for the transfer price between the two divisions?
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