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(b) If the market price of a similar stainless-steel blade is $13 per unit, will the blade division and the blender division be interested in setting a transfer price for its blades? Yes If so, within what range will that transfer price fall? Minumum transfer price $ 11 Maximum transfer price $ 16 eTextbook and Media Attempts: 1 of 1 used Suppose a new supplier enters the market, providing stainless-steel blades for $12 per unit. Will this change the transfer price range within which the blade division and blender division may agree to transact? Minumum transfer price $ Maximum transfer price $

(b) If the market price of a similar stainless-steel blade is $13 per unit, will the blade division and the blender division be interested in setting a transfer price for its blades? Yes If so, within what range will that transfer price fall? Minumum transfer price $ 11 Maximum transfer price $ 16 eTextbook and Media Attempts: 1 of 1 used Suppose a new supplier enters the market, providing stainless-steel blades for $12 per unit. Will this change the transfer price range within which the blade division and blender division may agree to transact? Minumum transfer price $ Maximum transfer price $

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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am. 115.

After 10 years in business, Blue's Company was making a significant profit on its Whiz-It Blenders. These blenders could whip up a frosty shake or act as a food processor. One key to this product's success is its stainless-steel blade, currently manufactured in-house. The blade division's costs are reported below. It currently only has capacity to supply the internal blender division with these blades. The company has not seriously considered taking these blades to the outside market yet. Direct material $4.00 per unit Direct labor 5.00 per unit Variable-MOH 2.00 per unit Fixed-MOH 5.00 per unit Total $16.00 per unit (a) If the market price of a similar stainless-steel blade is $13 per unit, will the blade division and the blender division be interested in setting a transfer price for its blades? Yes If so, within what range will that transfer price fall? (b) Minumum transfer price $ 11 Maximum transfer price $ 16 eTextbook and Media Attempts: 1 of 1 used Suppose a new supplier enters the market, providing stainless-steel blades for $12 per unit. Will this change the transfer price range within which the blade division and blender division may agree to transact? Minumum transfer price +A $ Maximum transfer price $
Transcribed Image Text:After 10 years in business, Blue's Company was making a significant profit on its Whiz-It Blenders. These blenders could whip up a frosty shake or act as a food processor. One key to this product's success is its stainless-steel blade, currently manufactured in-house. The blade division's costs are reported below. It currently only has capacity to supply the internal blender division with these blades. The company has not seriously considered taking these blades to the outside market yet. Direct material $4.00 per unit Direct labor 5.00 per unit Variable-MOH 2.00 per unit Fixed-MOH 5.00 per unit Total $16.00 per unit (a) If the market price of a similar stainless-steel blade is $13 per unit, will the blade division and the blender division be interested in setting a transfer price for its blades? Yes If so, within what range will that transfer price fall? (b) Minumum transfer price $ 11 Maximum transfer price $ 16 eTextbook and Media Attempts: 1 of 1 used Suppose a new supplier enters the market, providing stainless-steel blades for $12 per unit. Will this change the transfer price range within which the blade division and blender division may agree to transact? Minumum transfer price +A $ Maximum transfer price $
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