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BoeBoe Division of Vaughan Corporation makes and sells a single product which is used by manufacturers of dog food. Presently it sells 100,000 pounds per
BoeBoe Division of Vaughan Corporation makes and sells a single product which is used by manufacturers of dog food. Presently it sells 100,000 pounds per year to outside customers at $7 per pound. The annual capacity is 100,000 pounds and the variable cost to make each unit is $3. Bark Division of Vaughan Corporation would like to buy 5,000 pounds a year from Boeboe Division to use in its dog food. It is currently paying $8 per pound from an outside vendor. There would be no cost savings from transferring the product within the company rather than selling it on the outside market. This order is an all or none order. What is the maximum transfer price per pound from the perspective of Bark Division? O A. $3 B. $4 OC. $8 OD. $7
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