Fragmented Company has two divisions, A and B. Division A makes a part that Division B currently

purchases from an outside supplier for $80. Division B approaches Division A to purchase the product

internally.

Cost information on this part for Division A is as follows:

Variable manufacturing cost

Variable selling costs

Fixed costs $60 per unit

$20 per part

$15 per unitDivision A is operating at full capacity and sells all of its output to external customers for $102 per part.

Instructions

Calculate the minimum amount that Division A would accept to transfer the part to Division B.