Indigo Inc has two divisions. Division A makes and sells student desks. Division B manufactures...
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Indigo Inc has two divisions. Division A makes and sells student desks. Division B manufactures and sells reading lamps. Each desk has a reading lamp as one of its components Division A can purchase reading lamps at a cost of $10 from an outside vendor Division A needs 12,000 lamps for the coming year Division B has the capacity to manufacture 60,000 lamps annually, Sales to outside customers are estimated at 48,000 tamps for the next year. Reading lamps are sold at $12 cach. Variable costs are $7 perlamp and include $2 of variable sales costs that are not incurred if lamps are sold internally to Division A. The total amount of fixed costs for Division Bis 596,000 Suppose Division B could use the excess capacity to produce and sell externally 18,000 units of a new product at a unit selling price of $7. The unit variable cost for this new product is $5. What should be the minimum transfer price accepted by Division B for the 12,000 lamps and the maximum transfer price paid by Division A? Minimum transfer price accepted by Division B $ per unit Maximum transfer price paid by Division A per unit
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