Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Division B has provided the following information regarding the one product that it manufactures and sells on the outside market: Selling price per unit (on
Division B has provided the following information regarding the one product that it manufactures and sells on the outside market:
Selling price per unit (on the outside market) | $ | 60 | |
Variable cost per unit | $ | 44 | |
Fixed costs per unit (based on capacity) | $ | 8 | |
Capacity in units | 20,000 | ||
- Division C could use Division Bs product as a component part in the manufacture of 4,000 units of its own newly-designed product.
- Division C has received a quote of $58 from an outside supplier for a comparable part
If Division B is currently selling 15,000 units on the outside market, what is Division Bs lowest acceptable transfer price if it were to sell 4,000 units to Division C?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started