EXERCISE 12-17 (20 MINUTES)

5,000

The Carton Division can buy pulp from an outside supplier for $63 a ton

and would be unwilling to pay more than that for pulp in an internal

transfer. If the managers understand their own businesses and are co-

operative, they should agree to a transfer and should settle on a trans-

fer price within the range:

≤ ≤

$42 Transfer price $63