4. Can Division of FP Inc. makes and sells tin cans externally for $0.60 per can. Its unit variable costs and unit fixed costs are $0.24 and $0.08, respectively. The Packaging Division wants to purchase 50,000 cans at $0.32 a can. Selling internally will save $0.02 a can. Assuming there is sufficient capacity, what is the minimum transfer price it should accept? a. $0.24 b. $0.32 c. $0.22 d. $0.30

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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4. Can Division of FP Inc. makes and sells tin cans externally for $0.60 per can. Its unit variable costs
and unit fixed costs are $0.24 and $0.08, respectively. The Packaging Division wants to purchase
50,000 cans at $0.32 a can. Selling internally will save $0.02 a can.
Assuming there is sufficient capacity, what is the minimum transfer price it should accept?
a. $0.24
b. $0.32
c. $0.22
d. $0.30
Transcribed Image Text:4. Can Division of FP Inc. makes and sells tin cans externally for $0.60 per can. Its unit variable costs and unit fixed costs are $0.24 and $0.08, respectively. The Packaging Division wants to purchase 50,000 cans at $0.32 a can. Selling internally will save $0.02 a can. Assuming there is sufficient capacity, what is the minimum transfer price it should accept? a. $0.24 b. $0.32 c. $0.22 d. $0.30
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