Heart Company Has Two Divisions

question 129

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, the range of prices that should be used during negotiations between the two divisions is

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

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