Turbo's P division has a maximum production capacity of 80,000 units. Currently, it produces and...
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Accounting
Turbo's P division has a maximum production capacity of 80,000 units. Currently, it produces and sells 70,000 units annually on the external market at the regular price of $100. The variable unit production cost of the P division is $60 and the variable operating cost is $12 per unit. Turbo's Q division is currently purchasing 40,000 units from an outside supplier at a price of $90 per unit. Division Q wishes to source in the future from Division P. However, it wishes to offer only a unit price of $85 to Division P. In the event of an internal transfer, Division P would save $3.5 per unit in shipping costs. variable operations. What is the minimum transfer price required by Division P?
Question 24 options:
a- $85
b- $92,125
c- No answer fits
d- $89.5
e- $93
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