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aliina [53]
3 years ago
10

The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to

external customers for $25 per unit. Variable costs for the casing are $12 per unit and fixed cost is $3 per unit. Cotwold executives would like for the Molding Division to transfer 8,000 units to the Assembly Division at a price of $18 per unit. Assume that the Molding Division has enough excess capacity to accommodate the request.
Calculate the effect on Molding Division’s net income if it accepts the $18 transfer price.
Business
1 answer:
forsale [732]3 years ago
4 0

Answer:

the effect on Molding Division’s net income if it accepts the $18 transfer price is $6 per unit

Explanation:

The computation of the effect on Molding Division’s net income if it accepts the $18 transfer price is shown below:

= Transfer price - variable cost per unit

= $18 - $12

= $6 per unit

Hence, the effect on Molding Division’s net income if it accepts the $18 transfer price is $6 per unit

So, the same is to be considered and relevant

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