Doodles Wine, Inc., has a Bottle Division that manufactures and sells a number of bottles,...
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Doodles Wine, Inc., has a Bottle Division that manufactures and sells a number of bottles, including a bottle that could be used by another division in the company, the Wine Processing Division. Data concerning that bottle appear below: Parts Division Capacity in Units Selling Price to outside customers 500,000 $2.80 Variable cost per unit $1.80 Fixed cost per unit (based on capacity $0.20 The Wine Processing Division is currently purchasing 300,000 of these bottles per year from an outside supplier at a cost of $2.75 per bottle. Currently the Bottle division is only producing and selling 320.000 bottles a year. There is no savings in selling within the company. Assuming this is an all or none order, what should be the minimum acceptable transfer price (per unit) for the bottles from the standpoint of the Bottles Division
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