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Division A makes a part with the following characteristics Production capacity in units Selling price to outside customers (per unit) Variable cost per unit Fixed
Division A makes a part with the following characteristics Production capacity in units Selling price to outside customers (per unit) Variable cost per unit Fixed costs per unit 50,000 $30 $18 $3 Division B, another division of the same company, would like to purchase this part each from Division A. Division B is currently purchasing this part from an outside supplier at a price of $28 per unit. If Division A sells to Division B $1 in variable costs can be avoided Suppose that Division A has ample idle capacity to handle all of Division B's needs without any increase in fixed costs and without cutting into its sales to outside customers. From the point of view of Division A, any sales to Division B should be priced no lower than which of the following? O a. $30 o b. $29 O C. $18 o d. $17 e. None of the answers provided
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