Becker company has two divisions hawley and rollag hawley

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Reference no: EM13578956

Becker Company has two divisions, Hawley and Rollag. Hawley produces an item that Rollag could use in its production. Rollag currently is purchasing 22,000 units from an outside supplier for $14 per unit. Hawley is currently operating at less than its rated capacity of 600,000 units and has variable costs of $7 per unit. The full cost to manufacture the unit is $12. Hawley currently sells 450,000 units at a selling price of $19 per unit.

What will be the effect on Becker Company's operating profit if the transfer is made internally?
What is the minimum transfer price from Hawley's perspective?
What is the maximum transfer price from Rollag's perspective?

Reference no: EM13578956

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