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The FRT Corporation is a large corporation with several different divisions producing a variety of products. The Silk Division produces a high-quality silk fabric.
The FRT Corporation is a large corporation with several different divisions producing a variety of products. The Silk Division produces a high-quality silk fabric. The Silk Division has the capacity to produce 24,000 rolls of fabric per month and the variable cost of each roll is $48. Currently, the Silk Division sells approximately 19,000 rolls of silk each month to customers for $63 per roll. Another division of FRT Corporation, the Scarf Division, is interested in using the silk to produce scarves, and they are interested in purchasing 12,000 rolls of silk fabric per month from the Silk Division. The Silk Division would not realize any savings in variable costs from selling the silk to another division instead of selling to outside customers. From the Silk Division's standpoint, the lowest acceptable transfer price would be: Multiple Choice $63.00 per unit $23.75 per unit $48.00 per unit $56.75 per unit
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