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What is the lowest price that Division X could accept

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Reference no: EM132453226

Problem - You have been provided with the following information for Division X of a decentralized company:

Selling price - $45

Variable cast per unit - 33

Fixed cast per unit - 12

Sales volume (units) - 22,500

Capacity (units) - 25,500

Division W would like to purchase all of its units internally. Division W needs 6,000 units each period and currently pays $42 per unit to an outside firm. What is the lowest price that Division X could accept from Division W?

a. $45.

b. $42.

c. $40.

d. $33.

Reference no: EM132453226

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