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The Rubber Division of Morgain Company manufactures rubber moldings and sells them externally for $40. At the current level of production, its variable cost is $18 per unit, and its fixed cost per unit is $15. Morgain's president wants the Rubber Division to transfer 5,000 units to another company division.
Problem 1: Assuming the Rubber Division has available capacity for 5,000 additional units, the economic rule would set the transfer price as:
Option 1: $33 Option 2: $40 Option 3: $15 Option 4: $18
Compute the missing amounts for the following table. Please refer to "B" and the number of units. The number of units should be 13,260 as indicated
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