Multiple Choice
Division X makes a part that it sells to customers outside of the company. Data concerning this part appear below: 
Division Y of the same company would like to use the part manufactured by Division X in one of its products. Division Y currently purchases a similar part made by an outside company for $49 per unit and would substitute the part made by Division X. Division Y requires 5,000 units of the part each period. Division X has ample excess capacity to handle all of Division Y's needs without any increase in fixed costs and without cutting into outside sales. What is the lowest transfer price Division X will accept?
A) $50
B) $49
C) $46
D) $30
E) $20
Correct Answer:
Verified
Correct Answer:
Verified
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