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 $1.54 per unit, full cost is $1.96. The component sells on the open market for $5.07. 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

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Rakesh 

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 $1.54 per unit; full cost is $1.96, The component sells on the open market for $5.07.
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 $1.54 per unit; full cost is $1.96, The component sells on the open market for $5.07. 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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