Division X makes a part that it sells to customers outside of the company. Data...
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| Division X makes a part that it sells to customers outside of the company. Data concerning this part appear below: |
| Selling price to outside customers | $49 |
| Variable cost per unit | $45 |
| Total fixed costs | $482,000 |
| Capacity in units | 29,200 |
| Division Y of the same company would like to use the part manufactured by Division X in one of its products. Division Y currently purchases a similar part made by an outside company for $49 per unit and would substitute the part made by Division X. Division Y requires 5,640 units of the part each period. Division X can already sell all of the units it can produce on the outside market. What should be the lowest acceptable transfer price from the perspective of Division X? |
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