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Division A produces a component used by Division B. Information related to the component: Capacity Sales price to outside customers Variable cost Fixed cost
Division A produces a component used by Division B. Information related to the component: Capacity Sales price to outside customers Variable cost Fixed cost 58,000 units $64/unit $20/unit $17/unit based on capacity Division B has been purchasing the components from an outside supplier at $59/unit. The division needs 3,000 units. Division A is currently operating at capacity. a) What is the minimum transfer price per unit that Division A would be willing to accept? (Worth 2 points) ) What is the maximum transfer price per unit that Division B would be willing to accept? (Worth 2 points) Will a transfer occur? Explain. (Worth 1 point)
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