Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Division C makes a part that it sells to customers outside of the company. Data concerning this part appear below Selling price to outside customers
Division C makes a part that it sells to customers outside of the company. Data concerning this part appear below Selling price to outside customers Variable cost per unit 60 38 Total fixed costs $490,000 25,600 Capacity in units 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 $59 per unit and would substitute the part made by Division C. Division D requires 5,340 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 $60 $59 $56 $38
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