Division Big Does Have Excess Capacity to Produce Product XX

Multiple Choice

Division Big does have excess capacity to produce Product XX.The division can sell Product XX for $10 per unit outside the company.Variable costs are $6 per unit.Division Small wants to purchase Product XX from Division Big to use in Product ZZ.The selling price of Product ZZ is $25 per unit and variable costs to finish the product after the transfer are $12 per unit.An outside supplier will sell Product XX for $12.What is the minimum transfer price for Division Big?

A) $4 per unit
B) $6 per unit
C) $10 per unit
D) $12 per unit