Ahart Products, Inc., has a Transmitter Division that manufactures and sells a number of products, including a standard transmitter that could be used by another division in the company, the Remote Devices Division, in one of its products. Data concerning that transmitter appear below: Capacity in units 79,000Selling price to outside customers$61Variable cost per unit$42Fixed cost per unit (based on capacity)$8?The Remote Devices Division is currently purchasing 4,000 of these transmitters per year from an overseas supplier at a cost of $59 per transmitter.?Assume that the Valve Division is selling all of the valves it can produce to outside customers. Also assume that $3 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?
A. $47 per unit
B. $59 per unit
C. $58 per unit
D. $61 per unit
Answer: C
Business
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