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Business, 01.04.2021 15:30 daniel195

In each of the cases below, assume Division X has a product that can be sold either to outside customers or to Division Y of the same company for use in its production process. The managers of the divisions are evaluated based on their divisional profits. Case A B Division X: Capacity in units 200,000 200,000 Number of units being sold to outside customers 200,000 160,000 Selling price per unit to outside customers $ 90 $ 75 Variable costs per unit $ 70 $ 60 Fixed costs per unit (based on capacity) $ 13 $ 8 Division Y: Number of units needed for production 40,000 40,000 Purchase price per unit now being paid to an outside supplier $ 86 $ 74 Required: 1. Refer to the data in case A above. Assume in this case that $3 per unit in variable selling costs can be avoided on intracompany sales. a. What is the lowest acceptable transfer price from the perspective of the selling division

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