Winzel Ltd Has 2 Divisions, Diodes and Boards If Diodes Can Sell All of Its Production Externally, What

Multiple Choice

Winzel Ltd has 2 divisions, Diodes and Boards. The diode can be sold internally or externally. If sold externally, the sales price is $15 per diode. The Boards division needs 3 diodes for each electronic board it produces. The external sales prices and costs are: $\begin{array}{lrr}&\underline{\text {Diodes}}&\underline{\text {Boards}}\\\text { Sales price per unit } & \$ 15.00 & \$ 16.50 \\\text { Variable costs (direct) per unit } & 6.00 & 9.00 \\\text { Fixed costs per unit } & 3.00 & 6.00\end{array}$
If Diodes can sell all of its production externally, what is the minimum price at which it would be willing to sell internally, and what is the maximum price the Board Division would be willing to pay? $\begin{array} { l l } \text { Diodes } & \text { Boards }\\\underline{\text {Willing to Sell }}&\underline{\text {Willing to Pay}} \end{array}$
a. $\$ 15 \quad \quad \quad \quad \quad \quad \quad\$ 2.50$
b. $\$ 15 \quad \quad \quad \quad \quad \quad \quad \$ 7.50$
c. $\$ 15 \quad \quad \quad \quad \quad \quad \quad\$ 15.00$
d. $\$ 27 \quad \quad \quad \quad \quad \quad \quad \$ 27.00$

A) $15/$7.50
B) $15/$15
C) $15/$2.50
D) $15/$27