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How do you do this? Division A makes a part that it sells to customers outside of the company. Data concerning this part appear below:

How do you do this?

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Division A makes a part that it sells to customers outside of the company. Data concerning this part appear below: Selling price to outside customers 5 40 Variable cost per unit S 32 Total fixed costs 5 10,000 Capacity in. units 20, 000 Division B of the same company would like to use the part manufactured by Division A in one of its products. Division B currently purchases a similar part made by an outside company for $38 per unit and would substitute the part made by Division A. Division El requires 5,000 units of the part each period. Division A has sufcient capacity to produce the units for Division B without anyr increase in xed costs and without cutting into sales to outside customers. If Division A sells to Division B rather than to outside customers, the variable cost be unit would be $1 lower. What is the lowest acceptable transfer price Division A should accept

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