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Standards Eastern Division is currently purchasing a part from an outside supplier. The company Western Division, which has no excess capacity, makes and sells this
Standards Eastern Division is currently purchasing a part from an outside supplier. The company Western Division, which has no excess capacity, makes and sells this part for external customers at a variable cost of $20 and a selling price of $71. If Western begins sales to Eastern, it will use the general transfer-pricing rule and will be able to reduce variable cost on internal transfer by $14. Western would establish a minimum transfer price of:
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