EXERCISE 12-17 (20 MINUTES)

2. Any price below $235 will result in a decline in the profits of both the

Tube Division and the entire company. If the Tube Division meets a price

of $200, then profits will decrease by $87,500 as show below:

Minimum transfer price... $235

Outside supplier’s price... 200

Potential decrease in contribution margin... $ 35

Case 12-33 (90 minutes)