Division P of the Nyers Company makes a part that can either be sold to outside customers or transferred internally to Division Q for further processing. Annual data relating to this part are as follows: Annual production capacity 80,000 units Selling price of the item to outside customers $35 Variable cost per unit $23 Fixed cost per unit $5 Division Q of the Nyers Company requires 15,000 units per year and is currently paying an outside supplier $33 per unit. If outside customers demand only 50,000 units per year, then what is the lowest acceptable transfer price from the viewpoint of the selling division? A. $35 В. $33 С. $28 D. $23 E. None of the above

Division P of the Nyers Company makes a part that can either be sold to outside customers or transferred internally to Division Q for further processing. Annual data relating to this part are as follows: Annual production capacity 80,000 units Selling price of the item to outside customers $35 Variable cost per unit $23 Fixed cost per unit $5 Division Q of the Nyers Company requires 15,000 units per year and is currently paying an outside supplier $33 per unit. If outside customers demand only 50,000 units per year, then what is the lowest acceptable transfer price from the viewpoint of the selling division? A. $35 В. $33 С. $28 D. $23 E. None of the above

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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