Gil Jargon Corporation produces lawn mowers. The Battery division makes a battery that the Electric Motor division needs for a new product. The Battery division's variable cost of manufacturing the battery is $16 per unit. The battery is also available on the open market at a price of $21 per unit. The Electric Motor division needs 50,000 batteries per year.
Required:
| a. | If the Battery Division has adequate excess capacity to supply the 50,000 batteries, |
what is the minimum transfer price?
| b. | If the Battery Division has adequate excess capacity to supply the 50,000 batteries, |
what is the range of prices that is likely to be acceptable to both the Battery division and the Electric Motor division?
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