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Edwards Company has two operating divisions, A and B. The following information is provided for Division A:

Unit selling price
$167
Unit variable costs
$117
Unit fixed costs
$ 37

Division B uses the type of product produced by Division A and has approached Division A about buying the product internally. Division B is currently paying $162 to purchase the product from an outside source. If Division A sells internally it can save $18.5 per unit in variable costs. Assuming that Division A has sufficient excess capacity to produce all of the units requested by Division B, which of the following is the lowest price Division A should consider for the transfer?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9972818

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