What is the maximum price division two will pay for product

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Reference no: EM131354566

1. Beakman, Inc. imposes a payback cutoff of 3 years for its international investment projects. If the company has the following two projects available, should it accept either of them?

Year Cash Flow (A) Cash Flow (B)

0 -$49,000 -$55,000

1 $18,000 $13,000

2 $22,000 $15,000

3 $40,000 $24,000

4 $20,000 $255,000

2. Division 1 does not have excess capacity to produce Product Y. The division can sell Product Y for $10 per unit outside the company. Variable costs are $6 per unit. Division 2 wants to purchase Product Y from Division 1 to use in Product ZZ. The selling price of Product ZZ is $25 per unit and variable costs to finish the product after the transfer are $12 per unit. An outside supplier will sell Product Y for $12 per unit. What is the maximum price Division 2 will pay for Product Y?

$12 per unit

$13 per unit

$25 per unit

None of these

Reference no: EM131354566

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