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Jazzy Company's Electronics Division produces hands free audio devices. Their annual capacity is 100,000 units, the variable cost per unit is $25, their fixed cost per unit at full capacity is $10, and their contribution margin per unit is $40. Jazzy Company's Video Division would like to purchase 20,000 units from the Electronics Division. The Video Division can purchase the same device from an outside supplier for $70 per unit. The Electronics Division is currently producing and selling all 100,000 units.

Jazzy Company's Electronics Division produces hands free audio devices. Their annual capacity is 100,000 units, the variable cost per unit is $25, their fixed cost per unit at full capacity is $10, and their contribution margin per unit is $40. Jazzy Company's Video Division would like to purchase 20,000 units from the Electronics Division. The Video Division can purchase the same device from an outside supplier for $70 per unit. The Electronics Division is currently producing and selling all 100,000 units.

FINANCIAL ACCOUNTING
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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What is the lowest transfer price per unit the Electronics Division is willing to accept? $75 $70 $35 $65
Transcribed Image Text:What is the lowest transfer price per unit the Electronics Division is willing to accept? $75 $70 $35 $65
Use the following to answer questions 19 and 20: Jazzy Company's Electronics Division produces hands free audio devices. Their annual capacity is 100,000 units, the variable cost per unit is $25, their fixed cost per unit at full capacity is $10, and their contribution margin per unit is $40. Jazzy Company's Video Division would like to purchase 20,000 units from the Electronics Division. The Video Division can purchase the same device from an outside supplier for $70 per unit. The Electronics Division is currently producing and selling all 100,000 units.
Transcribed Image Text:Use the following to answer questions 19 and 20: Jazzy Company's Electronics Division produces hands free audio devices. Their annual capacity is 100,000 units, the variable cost per unit is $25, their fixed cost per unit at full capacity is $10, and their contribution margin per unit is $40. Jazzy Company's Video Division would like to purchase 20,000 units from the Electronics Division. The Video Division can purchase the same device from an outside supplier for $70 per unit. The Electronics Division is currently producing and selling all 100,000 units.
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