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A company has two divisions: Division A, which produces a component, and Division B, which uses the component in its final product. Division A has
A company has two divisions: Division A, which produces a component, and Division B, which uses the component in its final product. Division A has variable costs of $30 per unit and fixed costs of $10,000 per month. Division B can buy the component from external suppliers for $50 each. Determine the negotiated transfer price using the cost-plus method that ensures Division A earns a 25% markup on total costs.
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