Division A produces a part with the following characteristics: 
Division B, another division in the company, would like to buy this part from Division A. Division B is presently purchasing the part from an outside source at $28 per unit. If Division A sells to Division B, $1 in variable costs can be avoided. Suppose Division A is currently operating at capacity and can sell all of the units it produces on the outside market for its usual selling price. From the point of view of Division A, any sales to Division B should be priced no lower than:
Definitions:
Debt-Equity Ratio
The ratio demonstrating the proportionate role of debt and equity in a company's asset financing scheme.
Payout Ratio
The percentage of a company's earnings that is paid out to shareholders in the form of dividends.
Internal Growth Rate
The internal growth rate is a measure of an organization's ability to increase its sales and profit without issuing more stock or incurring new debt.
Full Capacity
A term referring to the maximum level of production or output that a facility can achieve under normal operating conditions.
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