Question: Division A, operating at full capacity, manufactures an aircraft engine component with unit variable product cost of $38 and market price of $50. Division A

Division A, operating at full capacity, manufactures an aircraft engine component with unit variable product cost of $38 and market price of $50. Division A incurs shipping costs of $3 per unit for sales to outside parties only. Division B uses this component in the manufacture of its own engine production activities. Top management allows negotiated transfer pricing. The maximum transfer price (the ceiling of the bargaining range) is
a. $38.
b. $50.
c. $44.
d. $47.
e. There is no bargaining range.

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