Question
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
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 $153000 Total fixed selling costs $30000 Per unit selling price to outside buyers $60 Capacity in units per year 30000 Division B of the same company is currently buying an identical product from an outside provider for $58 per unit. It wishes to purchase 4500 units per year from Division A. Division A is currently selling 30000 units of the product per year. If the internal transfer is made, Division A will not incur any selling costs. What would be the minimum transfer price per unit that Division A would be willing to accept?
A)$58
B)$10
C)$11
D)$60
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