Next Step (NS) is a division of Worldwide Electronics, Inc. NS produces videogame systems. These systems are sold to retailers. NS recently approached the manager of the Personal Computer Division regarding a request to buy a special circuit board for a new advanced video game system. NS has requested that the personal computer division produce 200,000 units of this special circuit board. The following facts are available regarding the Personal Computer (PC) Division.
Selling price of standard circuit board ....... $57
Variable cost of standard circuit board ....... 30
Additional variable cost of special circuit board .... 21

Instructions
For each of the following independent situations, calculate the minimum transfer price, and discuss whether the internal transfer should take place or whether Next Step should purchase the circuit board externally.
(a) Next Step has offered to pay the PC Division $63 per circuit board. The PC Division has no available capacity. The PC Division would have to forgo sales of 200,000 circuit boards to existing customers in order to meet the request of Next Step.
(b) Next Step has offered to pay the PC Division $96 per circuit board. The PC Division has no available capacity. The PC Division would have to forgo sales of 280,000 circuit boards to existing customers in order to meet the request of Next Step.
(c) Next Step has offered to pay the PC Division $63 per pager. The PC Division has available capacity.