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Question
Division M makes a part that it sells to customers outside of the company. Data concerning this part appear below:
Division O of the same company would like to use the part manufactured by Division M in one of its products. Division O currently purchases a similar part made by an outside company for $70 per unit and would substitute the part made by Division M. Division O requires 5,000 units of the part each period. Division M can sell every unit it produces on the outside market. What should be the lowest acceptable transfer price from the perspective of Division O?
A.$75
B.$66
C.$16
D.$50
E. $25
Answer
This answer is hidden. It contains 121 characters.
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