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Transfer Pricing : A company has a division that produces a component used by another division. The producing division has variable costs of $20 per
Transfer Pricing: A company has a division that produces a component used by another division. The producing division has variable costs of $20 per unit and fixed costs of $5,000 per month. The purchasing division can buy the component from an external supplier for $40 each. Determine the transfer price that maximizes the company's overall profit if the producing division has excess capacity.
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