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Zeilinger Products, Inc., has a Screen Division that manufactures and sells a number of products, including a standard screen that could be used by another
Zeilinger Products, Inc., has a Screen Division that manufactures and sells a number of products, including a standard screen that could be used by another division in the company, the Home Security Division, in one of its products. Data concerning that screen appear below:
Capacity in units | 40,000 | |
Selling price to outside customers | $ | 65 |
Variable cost per unit | $ | 28 |
Fixed cost per unit (based on capacity) | $ | 26 |
The Home Security Division is currently purchasing 8,000 of these screens per year from an overseas supplier at a cost of $58 per screen.
What is the maximum price that the Home Security Division should be willing to pay for screens transferred from the Screen Division?
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