The Engine Division of the Taylor Corporation sells small engines to the outside
ID: 2559105 • Letter: T
Question
The Engine Division of the Taylor Corporation sells small engines to the outside market at a selling price of $146 per engine. The Engine Division is currently operating at a capacity of 49286 engines per year and is currently selling 36149 engines annually. The variable cost of producing an engine is $109. The Snowmobile Division of the Taylor Corporation currently purchases 18738 engines from an external supplier at a cost of $143 per engine.
What is the maximum transfer price for a transfer of 18738 engines from the Engine Division to the Snowmobile Division?
Select one:
a. $143.00
b. $120.06
c. $109.00
d. $134.94
Explanation / Answer
Answer:
the maximum transfer price =$143
Explanation to the answer:
the maximum transfer price for a transfer of 18738 engines from the Engine Division to the Snowmobile Division is price at which Snowmobile Division buy the product form outside supplier