Operating at Full Capacity Assignment


Operating at Full Capacity Assignment

Division A produces a part with the following characteristics

Capacity in units 500,000

Selling per unit. $450

Variable cost per unit. $200

Fixed cost per unit. $6

Division B, another division in the company, would like to buy this part from division A. Division B is presently purchasing the part from an outside source at $425 per unit

Required 1) What is the minimum price division A would sell to Division B assuming Divison A is currently operating at full capacity?

2) What is the price (range ) that division A would sell to Division B if it’s operating at less than full capacity? Explain. Get Accounting homework help today