General Auto's Northern Division is currently purchasing a part from an outside supplier.The company's Southern Division,which has excess capacity,makes and sells this part for external customers at a variable cost of $19 and a selling price of $31.If Southern begins sales to Northern,it (1)will use the general transfer-pricing rule and (2)will be able to reduce variable cost on internal transfers by $3.On the basis of this information,Southern would establish a transfer price of:

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The Answer of General Auto's Northern Division is currently purchasing a part from an outside supplier.The company's Southern Division,which has excess capacity,makes and sells this part for external customers at a variable cost of $19 and a selling price of $31.If Southern begins sales to Northern,it (1)will use the general transfer-pricing rule and (2)will be able to reduce variable cost on internal transfers by $3.On the basis of this information,Southern would establish a transfer price of:

General Auto's Northern Division Is Currently Purchasing a Part from an Outside