Current Attempt in Progress

Vaughn Manufacturing manufactures and sells high$-$priced motorcycles. The Engine Division produces and sells engines to other motorcycle companies and internally to its Retail Division. It has been decided that the Engine Division will sell $26000$ units to the Retail Division at $$1050$ a unit. The Engine Division, currently operating at capacity, has a unit selling price of $$3550$ and unit variable costs and unit fixed costs of $$1050$ and $$700,$ respectively. The Production Division is currently paying $$3200$ per unit to an outside supplier. Of this amount, $$120$ per unit can be saved on internal sales from reduced selling expenses.

What is the minimum transfer price that the Engine Division should accept?

$$3200$

$$3550$

$$2500$

$$3430$

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