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Calculate the minimum amount that division a would accept

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Reference no: EM132703313

Fragmented Company has two divisions, A and B. Division A makes a part that Division B currently purchases from an outside supplier for $80. Division B approaches Division A to purchase the product internally.

Cost information on this part for Division A is as follows:

Variable manufacturing cost $60 per unit

Variable selling costs $20 per part

Fixed costs $15 per unit

Division A is operating at full capacity and sells all of its output to external customers for $102 per part.

Instructions

Problem1 : Calculate the minimum amount that Division A would accept to transfer the part to Division B.

Reference no: EM132703313

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