You have been provided with the following information for Division X of a decentralized company: Selling price
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Question:
You have been provided with the following information for Division X of a decentralized company:
Selling price
$
95
Variable cost per unit
65
Fixed cost per unit
28
Sales volume (units)
22,900
Capacity (units)
25,200
Division Y of the same company would like to purchase all of its units internally. Division Y needs 6,900 units each period and currently pays $89 per unit to an outside firm. What is the lowest price that Division X could accept from Division Y? (Assume that Division Y wants to use a sole supplier and willnotpurchase less than 6,900 from a supplier.)
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