Cichy Products, Incorporated, Has a Valve Division That Manufactures and Sells

question 316

Multiple Choice

Cichy Products, Incorporated, has a Valve Division that manufactures and sells a number of products, including a standard valve that could be used by another division in the company, the Pump Division, in one of its products. Data concerning that valve appear below: The Pump Division is currently purchasing 5,000 of these valves per year from an overseas supplier at a cost of $85 per valve. What is the maximum price that the Pump Division should be willing to pay for valves transferred from the Valve Division?

• A) $37 per unit
• B) $85 per unit
• C) $32 per unit
• D) $69 per unit

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