The laker co and heat co are both subsidiary companies

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The Laker Co. and Heat Co. are both subsidiary companies owned by the NBA Jam Co. The Laker Co. makes a product called the "Brick" with a variable cost per unit of $9 and total fixed expenses of $400,000. The Laker Co. can sell the product to other companies for $18. The Laker Co. has a capacity of 10,000 units, but is currently selling 9,000 units to outside companies (thus, there is idle capacity of 1,000 units). The Heat Co. can buy the "Brick" from an outside company for $16 per unit. If the Heat Co. needs 2,000 units of the "Brick", what would be the range of acceptable transfer prices between the Laker Co. and the Heat Co.?

Reference no: EM13575492

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