The following information is available for Division X of Weingarten Enterprises: Selling price to outside customers Variable cost per unit Total fixed costs $74 $60 $330,000 29,000 Capacity in units Division Y would like to purchase internally from Division X. Division Y now purchases 4,400 units each year from other companies at $71 per unit. Division X has enough excess capacity to handle all of Division Y's needs. From the perspective of the Division X manager, what is the lowest price that should be accepted for units transferred to Division Y?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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The following information is available for Division X of Weingarten Enterprises:
Selling price to outside customers
Variable cost per unit
Total fixed costs
$74
$60
$330,000
29,000
Capacity in units
Division Y would like to purchase internally from Division X. Division Y now purchases 4,400
units each year from other companies at $71 per unit. Division X has enough excess capacity to
handle all of Division Y's needs.
From the perspective of the Division X manager, what is the lowest price that should be accepted
for units transferred to Division Y?
Transcribed Image Text:The following information is available for Division X of Weingarten Enterprises: Selling price to outside customers Variable cost per unit Total fixed costs $74 $60 $330,000 29,000 Capacity in units Division Y would like to purchase internally from Division X. Division Y now purchases 4,400 units each year from other companies at $71 per unit. Division X has enough excess capacity to handle all of Division Y's needs. From the perspective of the Division X manager, what is the lowest price that should be accepted for units transferred to Division Y?
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