Using the formula in the text, if the lowest acceptable transfer price to the selling division is £90 and the lost contribution margin per unit on outside sales is £40, then the variable cost per unit must be

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The lowest acceptable transfer price to the selling division is the variable cost per unit plus the lost contribution margin per unit on outside sales. Given that the lost contribution margin is £40 and the lowest acceptable transfer price is £90, the variable cost per unit must be £90 - £40 = £50.

Using the Formula in the Text, If the Lowest Acceptable