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4. Division A produces a part with the following characteristics: ... 500,000 Capacity in units...... Selling price per unit ................... $450 Variable cost per unit....................$200
4. Division A produces a part with the following characteristics: ... 500,000 Capacity in units...... Selling price per unit ................... $450 Variable cost per unit....................$200 Fixed cost per unit............................$6 Division B, another division in the company, would like to buy this part from Division A. Division B is presently purchasing the part from an outside source at $425 per unit. Required: 1. What is the minimum price Division A would sell to Division B assuming Division A is currently operating at full capacity? 2. What is the price (range) that Division A would sell to Division B if it is operating at less than full capacity? Explain
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