You have been provided with the following information for Division X of a decentralized company: Selling...
You have been provided with the following information for
Division X of a decentralized company:
| Selling price | $ | 80 | |
| Variable cost per unit | 53 | ||
| Fixed cost per unit | 24 | ||
| Sales volume (units) | 23,400 | ||
| Capacity (units) | 26,200 | ||
Division Y of the same company would like to purchase all of its
units internally. Division Y needs 8,400 units each period and
currently pays $74 per unit to an outside firm. What is the lowest
price that Division X could accept from Division Y? (Assume that
Division Y wants to use a sole supplier and will
notpurchase less than 8,400 from a supplier.)
-
$80.
-
$74.
-
$71.
-
$53.
Homework Answers
Answer : D = $ 53.
>> Lowest price can be accepted is variable cost.
>> Lowest price = $ 53.
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