Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Division C makes a part that it sells to customers outside of the company. Data concerning this part appear below: 4 Selling price to outside

image text in transcribed

Division C makes a part that it sells to customers outside of the company. Data concerning this part appear below: 4 Selling price to outside customers Variable cost per unit Total fixed costs Capacity in units $ 49 $ 45 $ 482,000 29,200 0/1 points awarded Scored Division D of the same company would like to use the part manufactured by Division C in one of its products. Division D currently purchases a similar part made by an outside company for $48 per unit and would substitute the part made by Division C. Division D requires 5,640 units of the part each period. Division C has ample excess capacity to handle all of Division D's needs without any increase in fixed costs and without cutting into outside sales. What is the lowest acceptable transfer price from the standpoint of the selling division? Multiple Choice $49 $48 O $47 $45

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting

Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer

12th Edition

978-0073526706, 9780073526706

More Books

Students also viewed these Accounting questions