Steven Company's Records Reveal the Following The Variable Costs of Division B Will Be Incurred Whether

Multiple Choice

Steven Company's records reveal the following: $\begin{array}{lr}\text { Division A }\\\text { Market price of finished part to outsiders } & \$ 75 \\\text { Variable costs per part } & \underline{51} \\\text { Contribution margin per part } & \underline{\$ 24} \\\text { Total contribution for } 10,000 \text { parts } & \$ 240,000\end{array}$

$\begin{array}{ll}\text { Division B }\\\text {Sales price of finished product Variable costs: }&&&\$105\\\text {Division A 1 part @ \$51) }&\\\text {Division B }&&\$51\\\text {Processing }&\$27\\\text {Selling }&12&39&-90\\\text {Contribution margin per unit }&&&\$15\\\text { Total contribution for } 10,000 \text { units }&&&\$150,000\end{array}$
The variable costs of Division B will be incurred whether it buys from Division A or from an outside supplier.If Division A wants to transfer the parts to Division B for $81, the manager of Division B would _____.

A) not want to buy from Division A, as the same product could be purchased at the market price of $75
B) buy from Division A, as this would be in the best interest of the company as a whole
C) buy the part from Division A as long as Division A could supply a large enough quantity to make it profitable to Division B
D) probably ask Division A's manager to split the difference between the $81 and the market price of $75 to arrive at a transfer price of $78