Nanke Products,Inc.,has a Sensor Division that manufactures and sells a number of products,including a standard sensor that could be used by another division in the company,the Safety Products Division,in one of its products.Data concerning that sensor appear below:
The Safety Products Division is currently purchasing 3,000 of these sensors per year from an overseas supplier at a cost of $59 per sensor.
Assume that the Sensor Division is selling all of the sensors it can produce to outside customers.What should be the minimum acceptable transfer price for the sensors from the standpoint of the Sensor Division?
A) $37 per unit
B) $59 per unit
C) $20 per unit
D) $64 per unit

Question

Nanke Products,Inc.,has a Sensor Division that manufactures and sells a number of products,including a standard sensor that could be used by another division in the company,the Safety Products Division,in one of its products.Data concerning that sensor appear below:
 The Safety Products Division is currently purchasing 3,000 of these sensors per year from an overseas supplier at a cost of $59 per sensor.
Assume that the Sensor Division is selling all of the sensors it can produce to outside customers.What should be the minimum acceptable transfer price for the sensors from the standpoint of the Sensor Division?
A) $37 per unit 
B) $59 per unit 
C) $20 per unit 
D) $64 per unit

Quizplus · Accepted Answer

The Answer is D