Pre-assignment Practice Chapter 11 17. Division X manufactures and sells a standard relay that could...
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Pre-assignment Practice Chapter 11 17. Division X manufactures and sells a standard relay that could be used by division Y. Data concerning that relay appear below: Capacity in units 86,000 Selling price to outside customers $63 Variable cost per unit $ 41 Fixed cost per unit (based on capacity) $ 10 Division Y is currently purchasing 15,000 of these relays per year from an overseas supplier at a cost of $57 per relay. Assume that Division X is selling all of the valves it can produce to outside customers. Also assume that $10 in variable expenses can be avoided on transfers within the company due to reduced shipping and selling costs. What should be the minimum acceptable transfer price for the valves from the standpoint of the Valve Division? O $57 per unit O $41 per unit O $53 per unit O $63 per unit Will the managers reach an agreement on transfer price? O yes O no
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