Peppertree Company has two divisions, East and West. Division East manufactures a component that Division West uses. The variable cost to produce this component is $1.46 per unit; full cost is $2.00. The component sells on the open market for $5.03. Assuming Division East has excess capacity, what is the lowest price Division East will accept for the component? What is the highest price that Division West will pay for it? (Enter your answers in 2 decimal places.) Lowest price Division East will accept Highest price Division West will pay

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter10: Evaluating Decentralized Operations
Section: Chapter Questions
Problem 17E: Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside...
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Peppertree Company has two divisions, East and West. Division East manufactures a component that Division West uses. The variable cost to produce this component is $1.46 per unit; full cost is $2.00. The component sells on the open market for $5.03.

 

Assuming Division East has excess capacity, what is the lowest price Division East will accept for the component? What is the highest price that Division West will pay for it? (Enter your answers in 2 decimal places.)

Peppertree Company has two divisions, East and West. Division East manufactures a component that Division West uses. The variable
cost to produce this component is $1.46 per unit; full cost is $2.00. The component sells on the open market for $5.03.
Assuming Division East has excess capacity, what is the lowest price Division East will accept for the component? What is the highest
price that Division West will pay for it? (Enter your answers in 2 decimal places.)
Lowest price Division East will accept
Highest price Division West will pay
Transcribed Image Text:Peppertree Company has two divisions, East and West. Division East manufactures a component that Division West uses. The variable cost to produce this component is $1.46 per unit; full cost is $2.00. The component sells on the open market for $5.03. Assuming Division East has excess capacity, what is the lowest price Division East will accept for the component? What is the highest price that Division West will pay for it? (Enter your answers in 2 decimal places.) Lowest price Division East will accept Highest price Division West will pay
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