The Vega Division of Ace Company Makes Wheels That Can $\$ 42$

question 145

Multiple Choice

The Vega Division of Ace Company makes wheels that can either be sold to outside customers or transferred to the Walsh Division of Ace Company. Last month, the Walsh Division bought all 4,000 of its wheels from the Vega Division for $\$ 42$ each. The following data are available from last month's operations for the Vega Division:
$\begin{array}{|l|r|}\hline \text { Capacity } & 12,000 \text { wheels } \\\hline \text { Selling Price per Wheel to Outside Customers } & \$ 45 \\\hline \text { Variable Costs per Wheel Sold to Outside Customers } & \$ 30 \\\hline\end{array}$
If the Vega Division sells wheels to the Walsh Division, Vega can avoid \$2 per wheel in sales commissions. An outside supplier has offered to supply wheels to the Walsh Division for $\$ 41$ each.
-) What is the maximum price per wheel that Walsh should be willing to pay Vega?

• A) $28.
• B) $41.
• C) $42.
• D) $45.

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