Given the Following Data for Electrical Cord Division Assume That Electrical Cord Division Is Selling All It Can

Given the following data for Electrical Cord Division:
$$\begin{array} { | l | r | } \hline \text { Selling price to outside customers } & \$ 40 \\\hline \text { Variable cost per unit } & 30 \\\hline \text { Fixed cost- Total } & 10,000 \\\hline \text { Capacity (in units) } & 2,000 \\\hline\end{array}$$ Assume that Electrical Cord Division is selling all it can produce to outside customers.If it sells to the Appliance Division,$1 can be avoided in variable cost per unit.The Appliance Division is presently purchasing from an outside supplier at $38 per unit.From the point of view of the company as a whole,any sales to the Appliance Division should be priced at:

A) $40.
B) $39.
C) $38.
D) The company would not want the transfer to take place.

Correct Answer:

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