Week 5 Problems and questions

ACC 349

a. Chapter 8 - Exercise E8-11

E8-11 Allied Company's Small Motor Division manufactures a number of small motors used in household and office appliances. The Household Division of Allied then assembles and packages such items as blenders and juicers. Both divisions are free to buy and sell any of their components internally or externally. The following costs relate to small motor LN233 on a per unit basis.

Fixed cost per unit 5

Variable cost per unit 8

Selling price per unit 30

Instructions

(a) Assuming that the Small Motor Division has excess capacity, compute the minimum acceptable price for the transfer of small motor LN233 to the Household Division.

Cost per unit Opportunity cost minimum transfer price

13 0 13

(b)...