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Division X operates at full capacity and produces a component that it currently sells in a competitive market for $25 per unit. At the current
Division X operates at full capacity and produces a component that it currently sells in a competitive market for $25 per unit. At the current level of production, the fixed cost of producing this component is $8 per unit and the variable cost is $10 per unit. Division Z would like to purchase this component from Division A. What is the minimum transfer price Division X should charge Division Z for this component?
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