Transfer prices and divisional profits A chair manufacturer has two divisions: framing and upholster

Transfer prices and divisional profits A chair manufacturer has two divisions: framing and

upholstering The framing costs are $100 per chair and the upholstering costs

are $200 per chair The company makes 5,000 chairs each year, which are sold

for $500 Un-upholstered chair frames can be sold at cost to other chair manufacturers

a) What is the minimum transfer price for this company?

b) What is the profit of each division if the transfer price
is $150?

c) What is the profit of each division if the transfer price
is $200?

 

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