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) $ 62 Variable cost per unit $ 46 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 Division As lowest acceptable transfer price if it were to sell 4,000 units to Division B?

Multiple Choice

$54.00

$60.00

$16.00

$58.00