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

question 297

Multiple Choice

Bacot 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 8,000 of these valves per year from an overseas supplier at a cost of $47 per valve.What is the maximum price that the Pump Division should be willing to pay for valves transferred from the Valve Division?

• A) $45 per unit
• B) $28 per unit
• C) $47 per unit
• D) $17 per unit