Division A produces a product that it sells to the outside market. It has compiled...
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Accounting
Division A produces a product that it sells to the outside market. It has compiled the following:
| Variable manufacturing cost per unit | $9 |
| Variable selling costs per unit | $3 |
| Total fixed manufacturing costs | $146000 |
| Total fixed selling costs | $30000 |
| Per unit selling price to outside buyers | $59 |
| Capacity in units per year | 30000 |
Division B of the same company is currently buying an identical product from an outside provider for $57 per unit. It wishes to purchase 4600 units per year from Division A. Division A is currently selling 25400 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?
$10
$57
$9
$59
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