Division A produces a product that it sells to the outside market It has compiled the following Variable manufacturing cost per unit $9 Variable selling costs per unit $3 Total fixed manufacturing costs $144000 Total fixed selling costs $30000 Per unit selling price to outside buyers $42 Capacity i...

Division A produces a product that it sells to the outside market. It has compiled the following:

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Question:

Division A produces a product that it sells to the outside market. It has compiled the following:

Variable manufacturing cost per unit	$9
Variable selling costs per unit	$3
Total fixed manufacturing costs	$144000
Total fixed selling costs	$30000
Per unit selling price to outside buyers	$42
Capacity in units per year	30000

Division B of the same company is currently buying an identical product from an outside provider for $39 per unit. It wishes to purchase 6000 units per year from Division A. Division A is currently selling 25000 units of the product per year. If the internal transfer is made, Division A will not incur any selling costs. What would be the minimum transfer price per unit that Division A would be willing to accept?

$42.00

$5.00

$14.00

$13.00