Question
Assume Division A has provided the following information regarding the one product that it manufactures and sells on the outside market: Selling price per unit
Assume 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) | $ 100 |
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Variable cost per unit | $ 61 |
Fixed costs per unit (based on capacity) | $ 10 |
Capacity in units | 30,000 |
Division A has been offered the opportunity to sell 5,000 units of its only product to another division within the same company. The other division can either agree to a transfer price with Division A or purchase a comparable product on the outside market for $100. If Division A is currently selling 25,500 units on the outside market, what is the range of acceptable transfer prices between the two divisions?
Multiple Choice
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$100.00 Transfer price $103.00
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$74.90 Transfer price $100.00
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$64.90 Transfer price $100.00
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$93.00 Transfer price $100.00
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