Rey Enterprises has just opened a new division(Weatherly). One of their other di
ID: 2459039 • Letter: R
Question
Rey Enterprises has just opened a new division(Weatherly). One of their other divisions (Brinkly) makes a part that could be used in one of Weatherly products.
Brinkly info: Production Capacity -100,000 Parts per year, Currently selling 80,000 Parts per year, selling prices $60 per part,Variable costs: Manufacturing$30 per part,Selling$2 per part, Fixed costs$3,000,000 per year. Weatherly Division: Quantity needed 40,000 parts per year.. Price from outside $48 per part. Rey is unwilling to increase capacity. All variable selling costs would be avoided on an intrracompany transfer. Question A) Whats the maximum amount Weatherly would be willing to pay Brinkly? (B) What's the minimum amountBrinkly would be willing to charge Weatherly?(C)what's the overall impact (financially) on Rey Enterprises if the parts are made internally? Please Please...help us with this problem.. thank you
Explanation / Answer
A) maximum Amount of $ 48 per part weatherly would be willing to pay brinkley
B) Minimum amount $ 30 would be brinkley willing to charge weatherly
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