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snow_lady [41]
3 years ago
10

Division A of Barsema, Inc. has operating data as follows: Capacity 20,000 units Selling price $80 per unit Variable costs $45 p

er unit Fixed costs $20 per unit 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 has capacity available to meet B's requirements, what is the minimum price it should charge
Business
1 answer:
Neporo4naja [7]3 years ago
4 0

Answer:

the minimum price it should charge is $40 per unit.

Explanation:

Minimum Transfer Price = Variable Costs - Internal Savings + Opportunity Cost

<em>Note :  Division A has capacity available to meet B's requirements therefore there is no opportunity cost</em>.

There are Internal savings of $5 as A's variable costs will be $5 less per unit.

Minimum Transfer Price = $45 - $5

                                        = $40

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