Division A of Oshawa Corporation makes and sells a single product that is used by manufacturers of refrigerators. Presently, it sells 42,000 units per year to outside customers at $50 per unit. The annual capacity is 50,000 units, and the variable cost to make each unit is $42. Fixed costs are s100,000. Refrigerator Division of Oshawa Corporation would like to buy 10,000 units a year from Division A to use in its products. It currently purchases this product from an outside supplier for $46 per unit. What should be the lowest acceptable transfer price from the perspective of Division A? A) B) C) D) E) $42.00. $44.00 $43.60 $50.00. $46.00.
Division A of Oshawa Corporation makes and sells a single product that is used by manufacturers of refrigerators. Presently, it sells 42,000 units per year to outside customers at $50 per unit. The annual capacity is 50,000 units, and the variable cost to make each unit is $42. Fixed costs are s100,000. Refrigerator Division of Oshawa Corporation would like to buy 10,000 units a year from Division A to use in its products. It currently purchases this product from an outside supplier for $46 per unit. What should be the lowest acceptable transfer price from the perspective of Division A? A) B) C) D) E) $42.00. $44.00 $43.60 $50.00. $46.00.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter7: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 62P
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