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Micah Corporation has two divisions, A and B. The following information is provided for Division A: Unit selling price $ 76 Unit variable costs $
Micah Corporation has two divisions, A and B. The following information is provided for Division A:
Unit selling price | $ | 76 | |
Unit variable costs | $ | 43 | |
Unit fixed costs | $ | 23 | |
Division B uses the type of product produced by Division A and has approached Division A about buying the product internally. Division B is currently paying $58 to purchase the product from an outside source. If Division A sells internally, it can save $7.50 per unit in variable costs. Assuming Division A is operating at capacity, what price should it charge Division B if the transfer is to be made?
a. $58.00
b. $76.00
c.$66.00
d. $68.50
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