The Raisin Division of Trail Mix Foods, Incorporated had the following operating results last year: Sales (150,000 pounds of raisins) $ 60,000 Variable expenses 37,500 Contribution margin 22,500 Fixed expenses 12,000 Profit $ 10,500 Raisin expects identical operating results this year. The Raisin Division has the ability to produce and sell 200,000 pounds of raisins annually. Assume that the Peanut Division of Trail Mix Foods wants to purchase an additional 20,000 pounds of raisins from the Raisin Division. Raisin will be able to increase its profit by accepting any transfer price above:

The Raisin Division of Trail Mix Foods, Incorporated had the following operating results last year: Sales (150,000 pounds of raisins) $ 60,000 Variable expenses 37,500 Contribution margin 22,500 Fixed expenses 12,000 Profit $ 10,500 Raisin expects identical operating results this year. The Raisin Division has the ability to produce and sell 200,000 pounds of raisins annually. Assume that the Peanut Division of Trail Mix Foods wants to purchase an additional 20,000 pounds of raisins from the Raisin Division. Raisin will be able to increase its profit by accepting any transfer price above:

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing

Section: Chapter Questions

Problem 12E

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