Toldness Products, Inc., has a Connector Division that manufactures and sells a number of products,...
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Toldness Products, Inc., has a Connector Division that manufactures and sells a number of products, including a standard connector that could be used by another division in the company, the Transmission Division, in one of its products. Data concerning that connector appear below:
Capacity in units
57,000
Selling price to outside customers
$
67
Variable cost per unit
$
22
Fixed cost per unit (based on capacity)
$
29
The Transmission Division is currently purchasing 11,000 of these connectors per year from an overseas supplier at a cost of $58 per connector.
What is the maximum price that the Transmission Division should be willing to pay for connectors transferred from the Connector Division?
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