You have been provided with the following information for Division X of a decentralized company: Selling price Variable cost per unit Fixed cost per unit Sales volume (units) %24 105 48 20 21, 200 24,500 Capacity (units) Division Y of the same company would like to purchase all of its units internally. Division Y needs 9,900 units each period and currently pays $99 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 will not purchase less than 9,900 from a supplier.)

You have been provided with the following information for Division X of a decentralized company: Selling price Variable cost per unit Fixed cost per unit Sales volume (units) %24 105 48 20 21, 200 24,500 Capacity (units) Division Y of the same company would like to purchase all of its units internally. Division Y needs 9,900 units each period and currently pays $99 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 will not purchase less than 9,900 from a supplier.)

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter14: Decentralized Operations

Section: Chapter Questions

Problem 14.18E

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