Chantilly Industries Has Two Divisions: the Triangle Division and the Square

Chantilly Industries has two divisions: the Triangle Division and the Square Division. The Triangle Division produces a component that is used by the Square Division. Information about that component is as follows:
The Triangle Division can produce up to 15,000 components per year. The Square Division needs 1,500 units of the component for a product it manufactures.
Required:

a.
Determine the minimum transfer price that the Triangle Division would accept.
b.
Determine the maximum transfer price that the Square Division would pay.
c.
If the Triangle Division produces and sells 15,000 units in a highly competitive market, what would be the correct transfer price?

Correct Answer:

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