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Richardson,Inc.,is in the process of developing a transfer price for the first section of what will eventually be an automatic lawn-cutting device.The housing is made in Department A and is used by Department B in the final assembly operation.Unit costs for the housing are as follows:
Department B can purchase the housing from an outside supplier at $29.50 per unit.
a. Develop the cost-plus transfer price for the housing.
b. What should the transfer price be? Support your answer.
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