Division of Home Compayproduces pt Capacity in units 66,000 Selling price per un

Question

Division of Home Compayproduces pt Capacity in units 66,000 Selling price per unin Variable manufacturing costs per unit Variable selling cost per unit Fixed costs per unit at capacity 40.00 per unit 28.00 per unit s 2.00 per unit s 9.00 per unit sembly Division of Hume Company would tike to buy tdhis part from Parts Division Assembly Dviionw presently purchasing the part from an Division, variable selling costs can be avoided outside source at $37 per unit. If Parts Division sells to Assembly Currently Parts Division is operating at capacity price from the viewpoint of the selling division? and selling all it produces. What is the lowest acceptable transfer A. $37.00 B. $28.00 C. $38.00 D. $39.00 None of the above E. Parts Division is considering replacing one of its machines with a more efficient model, which will increase its capacity by 50%. Fixed costs per unit at the new capacity will be S8 per unit. Assume that the demand for the product remains the same. If Assembly Division needs 40,000 units of the part, what is the minimum transfer price Parts Division requires if they purchase the equipment? A. $30.50 B. $28.00 C. $38.00 4 D. $31.00 E. None of the above

Explanation / Answer

Solution:-

3. C. $38.00

Explanation:-

40 - 2 = 38.00

4. B. $28.00

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