Question
Division L at Reiner Ltd. manufactures 16618 units of part #70, which it currently sells to outside customers. Selected data for part #70 are given
Division L at Reiner Ltd. manufactures 16618 units of part #70, which it currently sells to outside customers. Selected data for part #70 are given below: Unit selling price to outside customers $90.05 Variable production cost per unit 57.13 Total fixed production cost (based on a capacity of 19754 units per year) $380000
Division K at Reiner Ltd. currently purchases 7602 units of part #70 from an outside supplier at a price of $96.00. Consideration is being given to buying internally rather than from the outside supplier. What is the lowest acceptable transfer price from the perspective of Division L?
Select one:
a. $90.05
b. $0
c. $96.00
d. $76.47
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