Asked by Narendrakumar Chowdary on Jul 29, 2024
Verified
Stokan Products, Incorporated, has a Antennae Division that manufactures and sells a number of products, including a standard antennae that could be used by another division in the company, the Aircraft Products Division, in one of its products. Data concerning that antennae appear below: The Aircraft Products Division is currently purchasing 5,000 of these antennaes per year from an overseas supplier at a cost of $57 per antennae.Assume that the Antennae Division is selling all of the antennaes it can produce to outside customers. What should be the minimum acceptable transfer price for the antennaes from the standpoint of the Antennae Division?
A) $40 per unit
B) $63 per unit
C) $57 per unit
D) $22 per unit
Transfer Price
The cost applied to goods or services exchanged between units or branches of the same organization.
Antennae Division
A specialized unit or department within an organization focused on telecommunications or related technological functions, involving the use of antenna systems.
Outside Supplier
A third-party company that provides goods or services to another company as part of the purchasing company's supply chain.
- Establish the minimum price at which a division is willing to make a transfer.
Verified Answer
Learning Objectives
- Establish the minimum price at which a division is willing to make a transfer.
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