Hello,

Can you please help with this problem, I'm having a hard time understanding it. I tried it but got it wrong.

P22-5B Dolby Ukes makes various types of ukeleles. The company is divided into a number of autonomous divisions that can either sell to Intemal units or sell eatemally. All divisions are located in buildings on the same place of property. The Alo Division has offered the Peg Division 50.26 per peg to supply it with 200,000 pegs. It has been purchasing these pegs for 50 28 per unk from outside suppliers. The Peg Division receives $0.30 per unk for sales made to outside customers on this type of pog. The variable cost of pegs sold externally by the Peg Division Is 50.18. It estimates that It will save $0.04 per peg of selling expenses on units sold Intemally to the Alto Division. The Peg Division has no excess capacity. Instructions (a) Calculate the minimum transfer price that the Peg Division should accept. Discuss whether It is In the Pog Dhislon's best Interest to accept the offer. PROBLEM 22-5B [a) The variable cost of Internal sales would be The opportunity cost would be Therefore, the minimum transfer price would be