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The western Division of Pryto Cororation sells Part D to other companies for $78.50 per unit. According to the company's cost accounting system, the costs
The western Division of Pryto Cororation sells Part D to other companies for $78.50 per unit. According to the company's cost accounting system, the costs to Western Division to make a unit of Product D are:
Direct material: $62
Direct labor: $ 2
Variable manufacturing overhead:$10
Fixed manufacturing overhead:$2
The Southern Division of Pryto Corporation uses a part much like Part D in one of its products. The Southern Division can buy the part from an outside supplier for $78.25 per unit. However, the Southern Division could use Part D stead of this part that it purchases from outside suppliers. What is the most that the Southern Division would be willing to pay the Western Division for Product D?
A. $78.25 per unit
B. $74.00 per unit
C. $78.50 per unit
D. $76.00 per unit
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