(Appendix 12A)Division 1 of Ace Company Makes and Sells Wheels

Multiple Choice

(Appendix 12A) Division 1 of Ace Company makes and sells wheels that can either be sold to outside customers or transferred to Division 2.The following data are available from last month: Division 1: Division 2: If Division 1 sells the wheels to Division 2, Division 1 can avoid $2 per unit in sales commissions.
Suppose that Division 1 sells 11, 500 units each month to outside customers.According to the formula in the text, what is the lowest acceptable transfer price from the viewpoint of the selling division?

A) $47.00 per unit
B) $43.50 per unit
C) $37.50 per unit
D) $34.73 per unit