Avery Corporation Has Two Divisions,A and B,which Are Both Organized

Avery Corporation has two divisions,A and B,which are both organized as profit centers;Division A produces and sells widgets to Division B and to outside customers.Division A has total costs of $35,$20 of which are variable.Division A is operating significantly below capacity and sells the widgets for $50.Division B has received an offer from an outsider vendor to supply all the widgets it needs (20,000 widgets) at a cost of $45.The manager of Division B is considering the offer but wants to approach Division A first.What is the minimum transfer price from Division A to Division B?

A) $20.
B) $35.
C) $45.
D) $50.

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free