The marker division of the crayola plant manufactures

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Reference no: EM13611394

The Marker Division of the Crayola plant manufactures erasable marker at a variable cost of $0.20 per marker. The Marker Division's fixed costs are $0.10 per unit. The Marker Division can sell the markers to external sources for $0.35 each. The Artist Division of Crayola includes markers in its ‘Little Artist' kit. The variable costs incurred by the Artist Division to include markers in the Little Artist kit are $0.10 each and the fixed costs are $0.04 each. The Little Artist kit sells for $15.

Required:

a. If the Market Division has excess capacity, what transfer price of markers maximizes Crayola's profits?

Reference no: EM13611394

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