Question
185) Rohrer Products, Inc., has a Motor Division that manufactures and sells a number of products, including a standard motor that could be used by
185) Rohrer Products, Inc., has a Motor Division that manufactures and sells a number of products, including a standard motor that could be used by another division in the company, the Automotive Division, in one of its products. Data concerning that motor appear below: Capacity in units 56,000 Selling price to outside customers $ 95 Variable cost per unit $ 41 Fixed cost per unit (based on capacity) $ 24 The Automotive Division is currently purchasing 10,000 of these motors per year from an overseas supplier at a cost of $88 per motor. Assume that the Motor Division has enough idle capacity to handle all of the -\utomotive Division's needs. What should be the minimum acceptable transfer price for the motors from the standpoint of the Motor Division? A) $65 per unit B) $88 per unit C) $41 per unit D) $95 per unit
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