Assume Division A has provided the following information regarding the one product that it manufactures and sells on the outside market: Selling price per unit (on the outside market) $ 100 Variable cost per unit $ 65 Fixed costs per unit (based on capacity) Capacity in units • $76 $86 • $89 $79 Division A has been offered the opportunity to sell 5,000 units of its only product to another division within the same company. If Division A is currently selling 27,000 units on the outside market, what is the lowest acceptable transfer price for Division A if it were to sell 5,000 units to the other division? Multiple Choice . $10 . 30,000
Assume Division A has provided the following information regarding the one product that it manufactures and sells on the outside market: Selling price per unit (on the outside market) $ 100 Variable cost per unit $ 65 Fixed costs per unit (based on capacity) Capacity in units • $76 $86 • $89 $79 Division A has been offered the opportunity to sell 5,000 units of its only product to another division within the same company. If Division A is currently selling 27,000 units on the outside market, what is the lowest acceptable transfer price for Division A if it were to sell 5,000 units to the other division? Multiple Choice . $10 . 30,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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
Transcribed Image Text:Assume Division A has provided the following information regarding the one product that it manufactures and sells on the
outside market:
Selling price per unit (on the outside market) $100
Variable cost per unit
$65
Fixed costs per unit (based on capacity)
$ 10
Capacity in units
30,000
Division A has been offered the opportunity to sell 5,000 units of its only product to another division within the same
company. If Division A is currently selling 27,000 units on the outside market, what is the lowest acceptable transfer price
for Division A if it were to sell 5,000 units to the other division?
Multiple Choice
• $76
• $86
• $89
• $79
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