The Ukulele Company's Radio Division Currently Is Purchasing Transistors from the Xiang

Multiple Choice

The Ukulele Company's radio division currently is purchasing transistors from the Xiang Co. for $3.50 each. The total number of transistors needed is 8,000 per month. Ukulele Company's electronics division can produce the transistors for a cost of $4.00 each and they have plenty of capacity to manufacture the units. The $4 is made up of $3.25 in variable costs, and $0.75 in allocated fixed costs. What should be the range of a possible transfer price?

A) No transfer should take place.
B) $3.51 to $3.99
C) $3.26 to $3.99
D) $3.26 to $3.49