7 The Southern Division of Barstol Company makes and sells a single product, which is a part used in manufacturing trucks. The annual production capacity is 40,000 units and the variable cost of each unit is $38. Presently the Southern Division sells 37,000 units per year to outside customers at $50 per unit. The Northern Division of Barstol Company would like to buy 20,000 units a year from Southern to use in its production. There would be no savings in variable costs from transferring the units internally rather than selling them externally. The lowest acceptable transfer price from the standpoint of the Southern Division should be closest to Multiple Choice O $48.20 per unit $38.00 per un $22.20 per unit $50.00 per unit
7 The Southern Division of Barstol Company makes and sells a single product, which is a part used in manufacturing trucks. The annual production capacity is 40,000 units and the variable cost of each unit is $38. Presently the Southern Division sells 37,000 units per year to outside customers at $50 per unit. The Northern Division of Barstol Company would like to buy 20,000 units a year from Southern to use in its production. There would be no savings in variable costs from transferring the units internally rather than selling them externally. The lowest acceptable transfer price from the standpoint of the Southern Division should be closest to Multiple Choice O $48.20 per unit $38.00 per un $22.20 per unit $50.00 per unit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:7 The Southern Division of Barstol Company makes and sells a single product, which is a part used in manufacturing trucks. The annual production capacity is 40,000 units
and the variable cost of each unit is $38. Presently the Southern Division sells 37,000 units per year to outside customers at $50 per unit. The Northern Division of Barstol
Company would like to buy 20,000 units a year from Southern to use in its production. There would be no savings in variable costs from transferring the units internally
rather than selling them extemaly. The lowest acceptable transfer price from the standpoint of the Southern Division should be closest to:
Multiple Choice
O
O
$48.20 per unit
$38.00 per unit
$22.20 per unit
$50.00 per unit
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