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SMHAUX960 Corporation has two divisions. Assume Division XX has a product that can be sold either to outside customers or to Division YY of the
SMHAUX960 Corporation has two divisions. Assume Division XX has a product that can be sold either to outside customers or to Division YY of the same company for use in its production process. The managers of the divisions are evaluated based on their divisional profits. Division XX: Capacity in units 100,000 Number of units being sold to outside customers Selling price per unit to outside customers $1,290 Variable costs per unit $548 Fixed costs per unit (based on capacity) 100,000 $117 Division YY: Number of units needed for production 40,000 Purchase price per unit now being paid to an outside supplier $860 Assume that $262 per unit in variable selling costs can be avoided on SMHAUX960's intracompany sales. Q: The lowest acceptable intracompany price per unit for the SMHAUX960's selling division is? A: $
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