Assume a company has two divisions, Division A and Division B. Division A has provided the following information regarding the one product that it manufactures and sells on the outside market:

Selling price per unit (on the outside market)	$	61
Variable cost per unit	$	44
Fixed costs per unit (based on capacity)	$	4
Capacity in units		20,000

Division B could use Division As product as a component part in the manufacture of 4,000 units of its own newly-designed product. Division B has received a quote of $58 from an outside supplier for a component part that is comparable to the one that Division A makes. If the companys divisional managers are evaluated based their divisions profits and Division A is currently selling 18,000 units on the outside market, what is the range of acceptable transfer prices between the two divisions?

Multiple Choice

• $56.00 Transfer price $60.00

• $52.50 Transfer price $58.00

• $52.50 Transfer price $60.00

• $56.00 Transfer price $58.00