Question: Division A, which is operating at capacity, produces a component that currently sells in a competitive market for $28 per unit. At the current level

Division A, which is operating at capacity, produces a component that currently sells in a competitive market for $28 per unit. At the current level of production, the fixed cost of producing this component is $9 per unit and the variable cost is $7 per unit. Division B would like to purchase this component from Division A. The price that Division A should charge Division B for this component is:

Multiple Choice

$7 per unit.
$16 per unit.
$24 per unit.
$28 per unit.
$35 per unit.

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