Wetherald Products, Incorporated, Has a Pump Division That Manufactures and Sells

Multiple Choice

Wetherald Products, Incorporated, has a Pump Division that manufactures and sells a number of products, including a standard pump that could be used by another division in the company, the Pool Products Division, in one of its products. Data concerning that pump appear below: The Pool Products Division is currently purchasing 5,200 of these pumps per year from an overseas supplier at a cost of $86 per pump.Assume that the Pump Division is selling all of the pumps it can produce to outside customers. What should be the minimum acceptable transfer price for the pumps from the standpoint of the Pump Division?

A) $88 per unit
B) $86 per unit
C) $106 per unit
D) $65 per unit