Division A produces a product that it sells to the outside market. It has compiled the following: Variable manufacturing cost per unit $10 Variable selling costs per unit $3 Total fixed manufacturing costs Total fixed selling costs Per unit selling price to outside buyers Capacity in units per year Division B of the same company is currently buying an identical product from an outside provider for $38 per unit. It wishes to purchase 5,000 units per year from Division A. Division A is currently selling 30,000 units of the product per year. If the internal transfer is made, Division A will not incur any selling costs. What would be the minimum transfer price per unit that Division A would be willing to accept? 0000 $11 $40 $38 $150,000 $30,000 $40 30,000 $10
Division A produces a product that it sells to the outside market. It has compiled the following: Variable manufacturing cost per unit $10 Variable selling costs per unit $3 Total fixed manufacturing costs Total fixed selling costs Per unit selling price to outside buyers Capacity in units per year Division B of the same company is currently buying an identical product from an outside provider for $38 per unit. It wishes to purchase 5,000 units per year from Division A. Division A is currently selling 30,000 units of the product per year. If the internal transfer is made, Division A will not incur any selling costs. What would be the minimum transfer price per unit that Division A would be willing to accept? 0000 $11 $40 $38 $150,000 $30,000 $40 30,000 $10
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Division A produces a product that it sells to the outside market. It has compiled the following:
Variable manufacturing cost per unit
$10
Variable selling costs per unit
$3
Total fixed manufacturing costs
Total fixed selling costs
Per unit selling price to outside buyers
Capacity in units per year
Division B of the same company is currently buying an identical product from an outside provider for $38 per unit. It wishes to
purchase 5,000 units per year from Division A. Division A is currently selling 30,000 units of the product per year. If the internal
transfer is made, Division A will not incur any selling costs. What would be the minimum transfer price per unit that Division A
would be willing to accept?
$11
$40
$38
$150,000
$30,000
$40
30,000
$10](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc8a615f0-ca85-4dab-baf0-ae10e0067da3%2F55d401fc-c7c4-4a6f-8ccb-9db3de66dd79%2Fdt0pjxn_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Division A produces a product that it sells to the outside market. It has compiled the following:
Variable manufacturing cost per unit
$10
Variable selling costs per unit
$3
Total fixed manufacturing costs
Total fixed selling costs
Per unit selling price to outside buyers
Capacity in units per year
Division B of the same company is currently buying an identical product from an outside provider for $38 per unit. It wishes to
purchase 5,000 units per year from Division A. Division A is currently selling 30,000 units of the product per year. If the internal
transfer is made, Division A will not incur any selling costs. What would be the minimum transfer price per unit that Division A
would be willing to accept?
$11
$40
$38
$150,000
$30,000
$40
30,000
$10
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Recommended textbooks for you
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education