q 42

The Wired Division of Zapped Ltd produces and sells electrical components. Its variable costs per unit are $75 for direct materials, $35 for direct labour and $25 for variable factory overhead. It currently can sell it components on the outside market at a price of $170/unit. Fixed overhead costs are $18 per unit based on a denominator volume of 150,000 units. The Spark Division of Zapped Ltd has approached the Wired Division and requested that it supply 25,000 units of the component. The Wired Division will save $5 per unit of direct materials costs for the components manufactured for the Spark Division Assuming Wired Division has idle capacity, what is the minimum transfer price the Wired Division should agree to accept? O A. $165 O B. $162 O C. $127 OD. $130 O E. $150