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Division A produces a product that it sells to the outside market. It has compiled the following: Variable manufacturing cost per unit $10 Variable
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 30.000 Capacity in units per year 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? No transfer will occur. At the maximum price that is acceptable to Division B O At the lowest price that is acceptable to Division A It depends on the negotiation skills of the division managers Ma Mil Qu Act Que A 12
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