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galben [10]
3 years ago
11

A company has two operating segments. Segment A of the company has been operating at 70% capacity for the last two years. It pro

duces a single product, which it sells to external customers for $17 per unit. Variable costs to produce one unit are $11 and the allocated fixed overhead costs are $3 per unit. Segment B purchases the same product produced by Segment A from an outside vendor for $15. Management is considering obtaining the product from Segment A. If Segment A begins to manufacture enough product to sell to its external customers, as well as to Segment B, Segment A will be operating at 94% capacity. What is the minimum price that Segment A should charge Segment B?
Business
1 answer:
Elena-2011 [213]3 years ago
3 0

Answer:

$11 per unit

Explanation:

Based on the information given the MINIMUM PRICE that Segment A SHOULD CHARGE Segment B will be $11 per unit reason been that we were told that segment A VARIABLE COSTS TO PRODUCE ONE UNIT is $11 per unit.

Therefore the MINIMUM PRICE that Segment A SHOULD CHARGE Segment B will be $11 per units.

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