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The Can Division of Fruit Products Inc. manufactures and sells tin cans externally for $0.60 per can. Its unit variable costs and unit fixed costs are $0.24 and $0.08, respectively. The Packaging Division wants to purchase 50,000 cans at $0.32 a can. Selling internally will save $0.02 a can.
-Assuming the Can Division is already operating at full capacity, what is the minimum transfer price it should accept?
Equilibrium Price
The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, leading to a stable market condition.
Supply Shift
A change in the quantity of a good or service that suppliers are willing and able to sell at a given price, due to factors other than price itself.
Price Elasticity
A metric for assessing how much demand for a product fluctuates with its price.
Sales Manager
A sales manager is responsible for leading and guiding a team of salespeople in an organization.
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