Wildhorse International Corporation has two divisions, Division A and Division B. Division A produces a motor that sells for $90 per unit, with the following costs based on its capacity of 184,000 units:

Direct materials		$29
Direct labour		25
Variable overhead		10
Fixed overhead		5

Division A is operating at 70% of normal capacity and Division B is purchasing 29,000 units of the same component from an outside supplier for $86 per unit.

Calculate the benefit, if any, to Division A in selling to Division B the 29,000 units at the outside suppliers price.

Benefit

$enter the amount of benefit in dollars

Calculate the lowest price Division A would be willing to accept.

Lowest price

$enter the lowest price in dollars

If Division A is operating at full capacity, what would be the lowest transfer price that it is willing to accept?

Lowest transfer price

$enter the lowest transfer price in dollars