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Micah Corporation has two divisions, A and B. The following information is provided for Division A: Unit selling price $ 76 Unit variable costs $ 43 Unit fixed costs $23 Division B uses the type of product produced by Division A and has approached Division A about buying the product internally. Division B is currently paying $58 to purchase the product from an outside source. If Division A sells internally, it can save $7.50 per unit in variable costs. Assuming Division A is operating at capacity, what price should it charge Division B if the transfer is to be made? Multiple Choice a. $58.00 b. $76.00 c. $66.00 d. $68.50

Micah Corporation has two divisions, A and B. The following information is provided for Division A: Unit selling price $ 76 Unit variable costs $ 43 Unit fixed costs $23 Division B uses the type of product produced by Division A and has approached Division A about buying the product internally. Division B is currently paying $58 to purchase the product from an outside source. If Division A sells internally, it can save $7.50 per unit in variable costs. Assuming Division A is operating at capacity, what price should it charge Division B if the transfer is to be made? Multiple Choice a. $58.00 b. $76.00 c. $66.00 d. $68.50

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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Micah Corporation has two divisions, A and B. The following information is provided for Division A: Unit selling price $ 76 Unit variable costs $ 43 Unit fixed costs $23 Division B uses the type of product produced by Division A and has approached Division A about buying the product internally. Division B is currently paying $58 to purchase the product from an outside source. If Division A sells internally, it can save $7.50 per unit in variable costs. Assuming Division A is operating at capacity, what price should it charge Division B if the transfer is to be made? Multiple Choice a. $58.00 b. $76.00 c. $66.00 d. $68.50
Transcribed Image Text:Micah Corporation has two divisions, A and B. The following information is provided for Division A: Unit selling price $ 76 Unit variable costs $ 43 Unit fixed costs $23 Division B uses the type of product produced by Division A and has approached Division A about buying the product internally. Division B is currently paying $58 to purchase the product from an outside source. If Division A sells internally, it can save $7.50 per unit in variable costs. Assuming Division A is operating at capacity, what price should it charge Division B if the transfer is to be made? Multiple Choice a. $58.00 b. $76.00 c. $66.00 d. $68.50
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