Assume that the Pump Division needs 20,000 special high-pressure valves per year. The Valve Division's variable costs to manufacture and ship the special valve would be P20 per unit. To produce these special valves, the Valve Division would have to reduce its production and sales of regular valves from 100,000 units per year to 70,000 units per year.

Required:

As far as Valve Division is concerned, what is the lowest acceptable transfer price?

Answer rating: 100% (QA)

The lowest acceptable transfer price for the Valve Division can be calculated based on the opportuni... View the full answer