A selling division produces components for a buying division that is considering accepting a special order for the products it produces. The selling division has excess capacity. The minimum price the selling division would be willing to accept is

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The minimum price the selling division would be willing to accept is the selling division's variable costs, especially when it has excess capacity. This is because, with excess capacity, the selling division would not incur additional fixed costs by fulfilling the internal order, so covering variable costs would ensure that the division does not lose money on the transaction.

A Selling Division Produces Components for a Buying Division That