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Division A, which has capacity, produces a component that currently sells in a competitive market for $23 per unit. At the current level of production,

Division A, which has capacity, produces a component that currently sells in a competitive market for $23 per unit. At the current level of production, the fixed cost of producing this component is $4 per unit and the variable cost is $6 per unit. Division B would like to purchase this component from Division A. The minimum price that Division A should charge Division B for this component is:

Multiple Choice

  • $29 per unit.

  • $10 per unit.

  • $23 per unit.

  • $6 per unit.

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