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12. Division X makes a part that it sells to customers outside of the company. Data concerning this part appear below: Selling Price to Outside
12. Division X makes a part that it sells to customers outside of the company. Data concerning this part appear below: Selling Price to Outside Customers Variable Cost per Unit Total Fixed Costs Capacity in Units $75 $50 $400,000 25.000 Division Y of the same company would like to use the part manufactured by Division X in one of its products. Division Y currently purchases a similar part made by an outside company for $70 per unit and would substitute the part made by Division X. Division Y requires 5,000 units of the part each period. Division X can already sell all of the units it can produce on the outside market. What should be the lowest acceptable transfer price from the perspective of Division X? a) $16. b) $50. c) $66. d) $75. 13. Division X of Charter Corporation makes and sells a single product that is used by manufacturers of forklift trucks. Presently, it sells 12,000 units per year to outside customers at $24 per unit. The annual capacity is 20,000 units, and the variable cost to make each unit is $16. Division Y of Charter Corporation would like to buy 10,000 units a year from Division X to use in its products. There would be no cost savings from transferring the units within the company rather than selling them on the outside market. What should be the lowest acceptable transfer price from the perspective of Division X? a) $16.00 b) $17.60. c) $21.40. d) $24.00
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