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You Have Been Provided with the Following Information for Division

Question 46

Multiple Choice

You have been provided with the following information for Division X of a decentralized company:
 Selling price $90 Variable cost per unit 66 Fixed cost per unit 20 Sales volume (units)  22,500 Capacity (units)  25,000\begin{array} { l r } \text { Selling price } & \$ 90\\\text { Variable cost per unit } & 66 \\\text { Fixed cost per unit } & 20 \\\text { Sales volume (units) } & 22,500 \\\text { Capacity (units) } & 25,000\end{array}
Division Y of the same company would like to purchase all of its units internally. Division Y needs 6,000 units each period and currently pays $84 per unit to an outside firm. What is the lowest price that Division X could accept from Division Y? (Assume that Division Y wants to use a sole supplier and will not purchase less than 6,000 from a supplier.)


A) $90.
B) $84.
C) $80.
D) $66.

Correct Answer:

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