Allied Company's Small motor division manufactures a # of small motors used in household and office appliances. The Household Division of Allied then assembles and packages such items as blenders and juicers. Both divisions are free to buy and sell any of their components internally or externally. The following costs relate to small motor LN233 on a per unit basis. Fixed cost per unit=$5, Variable cost per unit=$8, Selling price per unit=$30.
(A) assuming the small motor div. has excess capacity, compute the minimum acceptable price for the transfer of small motor LN233 to the Household Division.
(B) assuming - small motor div. does not have excess capacity, compute the minimum acceptable price for transfer of the motor to household div.
(C) explain why the level of capacity in small motor div. has and effect on the transfer price.