(Appendix 11A)Division X makes a part that it sells to customers outside of the company.Data concerning this part appear below:
Division Y of the same company would like to use the part manufactured by Division X in one of its products.Division Y currently purchases a similar part made by an outside company for $70 per unit and would substitute the part made by Division X.Division Y requires 5,000 units of the part each period.Division X can already sell all of the units it can produce on the outside market.What should be the lowest acceptable transfer price from the perspective of Division X?
A) $16.
B) $50.
C) $66.
D) $75.

Question

(Appendix 11A)Division X makes a part that it sells to customers outside of the company.Data concerning this part appear below: 
Division Y of the same company would like to use the part manufactured by Division X in one of its products.Division Y currently purchases a similar part made by an outside company for $70 per unit and would substitute the part made by Division X.Division Y requires 5,000 units of the part each period.Division X can already sell all of the units it can produce on the outside market.What should be the lowest acceptable transfer price from the perspective of Division X?
A) $16. 
B) $50. 
C) $66. 
D) $75.

Quizplus · Accepted Answer

The Answer of (Appendix 11A)Division X makes a part that it sells to customers outside of the company.Data concerning this part appear below: 
Division Y of the same company would like to use the part manufactured by Division X in one of its products.Division Y currently purchases a similar part made by an outside company for $70 per unit and would substitute the part made by Division X.Division Y requires 5,000 units of the part each period.Division X can already sell all of the units it can produce on the outside market.What should be the lowest acceptable transfer price from the perspective of Division X?
A) $16. 
B) $50. 
C) $66. 
D) $75.

(Appendix 11A)Division X Makes a Part That It Sells to Customers