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Iron Company reports the following information about its two divisions, Fabricating and Assembly.: ...

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Question

Accounting

  1. Iron Company reports the following information about its two divisions, Fabricating and Assembly.:

Fabricating Division:

Market price of the subassembly

$

50

Variable cost of the subassembly

$

20

Excess capacity (in units)

1,000

Assembly Division:

Number of units needed

900

  1. If the transfer price between the two divisions was to be negotiated, what is the range (high and low) of negotiating prices for the two divisions?

  1. Explain why the amounts you determined are the negotiating price range.

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