Reference no: EM132895376

Problem - The Western Division of Prvto Corporation sells Part D to other companies for $78.50 per unit. According to the company's cost accounting system, the costs to Western Division to make a unit o1 Product D are:

Direct material $62

Direct labor $2

Variable manufacturing overhead $10

Fixed manufacturing overhead $2

The Southern Division of Pryto Corporation uses a part much like Part D in one of its products. The Southern Division can buy this part from an outside supplier for $78.25 per unit. However, the Southern Division could use Part D instead of this part that it purchases from outside suppliers. What is the most that the Southern Division would be willing to pay the Western Division for Product D?