Bacot Products, Inc., has a Valve Division that manufactures and sells a number of products, including a standard valve that could be used by another division in the company, the Pump Division, in one of its products. Data concerning that valve appear below: Capacity in units 60,000Selling price to outside customers$53Variable cost per unit$28Fixed cost per unit (based on capacity)$17?Assume that the Valve Division is selling all of the valves it can produce to outside customers. What should be the minimum acceptable transfer price for the valves from the standpoint of the Valve Division?
A. $53 per unit
B. $47 per unit
C. $28 per unit
D. $45 per unit
Answer: A
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