Question

Wetherald Products, Inc., has a Pump Division that manufactures and sells a number of products, including a standard pump that could be used by another division in the company, the Pool Products Division, In one of its products. Data concerning that pump appear below: Capacity in units Selling price to outside customers Variable cost per unit Fixed cost per unit (based on capacity) 57,500 s 92 S 58 16 S The Pool Products Division is currently purchasing 4,500 of these pumps per year from an overseas supplier at a cost of $79 per pump. Assume that the Pump Division is selling all of the pumps It can produce to outside customers. What should be the minimum acceptable transfer price for the pumps from the standpoint of the Pump Division? Multiple Choice O $74 per unit $79 per unit O O $92 per unit O $58 per unit

Answer 1

margin t unel pen und Computation of the minimum acceptable acceptable hrane fer pace Minimo transfer parice Variable cost Contribution m per [e 58 +1 $92 858)] (f 58 + $34) unil (Answer) Note: 1; Fransparer diuision has not span capacity from equal ent and contrebution 9192 pen spd to v Price nimum transfer per So answer is P 192 per variable.com mangin per unel unif -