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(Solved): Assume a company has two divisions, Division A and Division B. Oivision A has provided the followin ...
Assume a company has two divisions, Division A and Division B. Oivision A has provided the following information regstding the one product that it manufactures and setls on the outside market: Division B could use Division A's product as a component part in the manutocture of 4,000 units of its own newly-designed product Division 8 has recelved a quote of \( \$ 60 \) from an outside supplier for a component part that is comparable to the one that Owislon \( \mathrm{A} \) makes. Also assume that the company's divisional managers are evaluated based on their division's profits and that Divsion A is currently seling no,0oo units on the outside market. If the managers of the two divisions do not agree on a transfer price and Divsion 8 purchases \( 4.000 \) component parts from an outside supplier, what would be the effect on the company's prof ths?