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?The Pump Division is currently purchasing 8,000 of these valves per year from an overseas supplier at a cost of $47 per valve.?What is the maximum price that the Pump Division should be willing to pay for valves transferred from the Valve Division?
A. $45 per unit
B. $17 per unit
C. $28 per unit
D. $47 per unit
Answer: D
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