Heart Company Has Two Divisions

question 86

Multiple Choice

Heart Company has two divisions.Division A is interested in purchasing 10,000 units from Division B.Capacity is available for Division B to produce these units.The per-unit market price is $30 per unit,with a variable cost of $25.The manager of Division A has offered to purchase the units at $22 per unit.In an effort to make this transfer price beneficial for the company as a whole,what is the range of prices that should be used during negotiations between the two divisions?

• A) $22 to $30
• B) $22 to $25
• C) over $30
• D) $25 to $30

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