Mandolin Company has two divisions. Division A is interested in purchasing 10,000 units from Division B. Capacity is available for Division B to produce these units. The per unit market price is $30 per unit, with a variable cost of $17. The manager of Division A has offered to purchase the units at $15 per unit. In an effort to make this transfer price beneficial for the company as a whole, what
is the range of prices that should be used during negotiations between the two divisions?
A) $15 to $30
B) $15 to $17
C) over $30
D) $17 to $30
D
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