Use the following information for the next 2 questions.
Division A of Sibley, Inc. has operating data as follows: Division B wants to purchase units from Division A. If Division A agrees to sell units to Division B, A's variable costs will be $5 less per unit.
-If Division A is operating at capacity, what is the minimum price it should charge?
A) $40
B) $75
C) $20
D) $60

Question

Use the following information for the next 2 questions.
Division A of Sibley, Inc. has operating data as follows:  Division B wants to purchase units from Division A. If Division A agrees to sell units to Division B, A's variable costs will be $5 less per unit.
-If Division A is operating at capacity, what is the minimum price it should charge?
A) $40 
B) $75 
C) $20 
D) $60

Quizplus · Accepted Answer

When operating at capacity, Division A should charge at least the market price or the price that covers its opportunity cost, which is typically the highest price among the options provided.

Use the Following Information for the Next 2 Questions