(Appendix 11A) Division P of the Nyers Company Makes a Part

question 16

Multiple Choice

(Appendix 11A) Division P of the Nyers Company makes a part that can either be sold to outside customers or transferred internally to Division Q for further processing. Annual data relating to this part are as follows:
Division Q of the Nyers Company requires 15,000 units per year and is currently paying an outside supplier $33 per unit. Consider each part below independently.
-If outside customers demand only 50,000 units per year,then according to the formula in the text,what is the lowest acceptable transfer price from the viewpoint of the selling division?

• A) $35 per unit
• B) $33 per unit
• C) $28 per unit
• D) $23 per unit