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Current Attempt in Progress Division A produces a product that it sells to the outside market. It has compiled the following: Variable manufacturing cost
Current Attempt in Progress Division A produces a product that it sells to the outside market. It has compiled the following: Variable manufacturing cost per unit $10 Variable selling costs per unit $3 Total fixed manufacturing costs $150,000 Total fixed selling costs $30,000 Per unit selling price to outside buyers $40 Capacity in units per year 30,000 Division B of the same company is currently buying an identical product from an outside provider for $38 per unit. It wishes to purchase 5,000 units per year from Division A. Division A is currently selling 25,000 units of the product per year. If the internal transfer is made, Division A will not incur any selling costs. At what price would the internal transfer occur? O It depends on the negotiation skills of the division managers. O At the maximum price that is acceptable to Division B. O No transfer will occur. O At the lowest price that is acceptable to Division A.
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