Question 15

Division A produces a product that it sells to the outside market. It has compiled the following:

Variable manufacturing cost per unit

$8Variable selling costs per unit$3Total fixed manufacturing costs$145000

Total fixed selling costs$30000Per unit selling price to outside buyers$46Capacity in units per year30000

Division B of the same company is currently buying an identical product from an outside provider for $44per unit. It wishes to purchase5300units per year from Division A. Division A is currently selling24700units of the product per year. If the internal transfer is made, Division A willnotincur any selling costs. What would be the maximum transfer price per unit that Division B would be willing to accept?