Cominsky Products, Inc., has a Screen Division that manufactures and sells a number of products, including a standard screen. Data concerning that screen appear below:
The company has a Home Security Division that could use this screen in one of its products. The Home Security Division is currently purchasing 6,000 of these screens per year from an overseas supplier at a cost of $96 per screen.
Required:
Assume that the Screen Division is selling all of the screens it can produce to outside customers. What is the acceptable range, if any, for the transfer price between the two divisions?

Question

Cominsky Products, Inc., has a Screen Division that manufactures and sells a number of products, including a standard screen. Data concerning that screen appear below:
  The company has a Home Security Division that could use this screen in one of its products. The Home Security Division is currently purchasing 6,000 of these screens per year from an overseas supplier at a cost of $96 per screen.
Required:
Assume that the Screen Division is selling all of the screens it can produce to outside customers. What is the acceptable range, if any, for the transfer price between the two divisions?

Quizplus · Accepted Answer

The Answer of Cominsky Products, Inc., has a Screen Division that manufactures and sells a number of products, including a standard screen. Data concerning that screen appear below:
  The company has a Home Security Division that could use this screen in one of its products. The Home Security Division is currently purchasing 6,000 of these screens per year from an overseas supplier at a cost of $96 per screen.
Required:
Assume that the Screen Division is selling all of the screens it can produce to outside customers. What is the acceptable range, if any, for the transfer price between the two divisions?