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Assume that the supplying division is operating at full capacity and is selling 100 percent of its production to outside buyers. The sales price per
Assume that the supplying division is operating at full capacity and is selling 100 percent of its production to outside buyers. The sales price per unit is $21; the variable cost per unit is $15; and the fixed costs are $200,000. If $8 in variable selling expenses can be saved when selling internally and can be passed on to the buying division, and if the fixed costs do not change, then what should the transfer price be?
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