Question

The windshield division of fast car co. makes windshields for use in fast car's assembly division. the windshield division inncurs variable costs of 248 per windshield and has capacity to make 590000 windshields per year. The market price is $450 per windshield. The Windshield division incurs total fixed costs of $3,000,000 per year.
Required:
Assuming the Windshield division has excess capacity, what is the range of possible transfer prices that could be used on transfers between the Windshield and Assembly divisions?

Answer 1

Answer and Explanation:
The possible transfer prices that could be used on transfers between the Windshield and Assembly divisions is $200 to $450.