What is the lowest price that division x could accept

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Question - You have been provided with the following information for Division X of a decentralized company:

Selling price

$45

Variable cost per unit

33

Fixed cost per unit

12

Sales volume (units)

22,500

Capacity (units)

25,000

Division W would like to purchase all of its units internally. Division W needs 6,000 units each period and currently pays $42 per unit to an outside firm. What is the lowest price that Division X could accept from Division W?

$45.

$42.

$40.

$33.

Reference no: EM131624759

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