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Ganus Products, Incorporated, has a Relay Division that manufactures and sells a number of products, including a standard relay that could be used by another

Ganus Products, Incorporated, has a Relay Division that manufactures and sells a number of products, including a standard relay that could be used by another division in the company, the Electronics Division, in one of its products. Data concerning that relay appear below:
Capacity in units 77,500
Selling price to outside customers $ 61
Variable cost per unit $ 18
Fixed cost per unit (based on capacity) $ 34
The Electronics Division is currently purchasing 10,850 of these relays per year from an overseas supplier at a cost of $58 per relay.
Assume that the Relay Division is selling all of the relays it can produce to outside customers. Also assume that $7 in variable expenses can be avoided on transfers within the company due to reduced shipping and selling costs. Does there exist a transfer price that would make both the Relay and Electronics Division financially better off than if the Electronics Division were to continue buying its relays from the outside supplier?

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