Yellow companys ax division has capacity of 200000 units

Reference no: EM13597490

Yellow Company's Ax division has capacity of 200,000 units. Normal selling price is $22.00 per unit. At current operating levels, fixed costs are $4 per unit and variable costs are $8 per unit. Another division of Yellow Company would like to buy from the Ax division.Assume that the Ax division is operating at 80% of capacity. The Hatchet division would like to purchase 20,000 units. No variable cost would be avoided on the sale. What is the lowest price the Ax division would accept if it wishes to see no decline in profits?

Reference no: EM13597490

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