2. Information of department A is as follows Selling price Fixed cost Production units and...
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2. Information of department A is as follows Selling price Fixed cost Production units and sold to external market 40,000 units Marginal cost = Variable cost $65 per unit $120 per unit $720,000 per year Department B requires components from department A 10,000 units per year. Department B purchases components from the market at $105 per unit. Case 1 Department A has available capacity and the demand from outsider is not higher than the current demand 1.1 if Department A produces for Department B, what is the transfer cost per unit. 1.2 If Department B purchases from Department A, what profit or loss for the company should be. Case 2 Department A currently uses the full capacity 2.1 what the transfer price of department A to be charged for department B? 2.2 if Department A produces and transfer to Department B at $105 per unit, what is the profit or loss of the company. Case 3 Department A has the maximum capacity at 45,000 units per year and the demand from outsider is not higher than the current demand. If Department A produces and transfers to Department B 10,000 units
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