Martin Company's records reveal the following: Variable costs:
The variable costs of Division Y will be incurred whether it buys from Division X or from an outside supplier.Assume Division X is working at full capacity; there is no excess capacity.Division Y can buy the component from an outside supplier for $32 per unit.What is the lowest transfer price per unit Division X should accept from Division Y for the component?
A)$8 per unit
B)$22 per unit
C)$24 per unit
D)$32 per unit

Question

Martin Company's records reveal the following:   Variable costs:
 The variable costs of Division Y will be incurred whether it buys from Division X or from an outside supplier.Assume Division X is working at full capacity; there is no excess capacity.Division Y can buy the component from an outside supplier for $32 per unit.What is the lowest transfer price per unit Division X should accept from Division Y for the component?
A)$8 per unit 
B)$22 per unit 
C)$24 per unit 
D)$32 per unit

Quizplus · Accepted Answer

The Answer of Martin Company's records reveal the following:   Variable costs:
 The variable costs of Division Y will be incurred whether it buys from Division X or from an outside supplier.Assume Division X is working at full capacity; there is no excess capacity.Division Y can buy the component from an outside supplier for $32 per unit.What is the lowest transfer price per unit Division X should accept from Division Y for the component?
A)$8 per unit 
B)$22 per unit 
C)$24 per unit 
D)$32 per unit

Martin Company's Records Reveal the Following: Variable Costs