Avery Corporation has two divisions, A and B, which are both organized as profit

Question

Avery Corporation has two divisions, A and B, which are both organized as profit centers; Division A produces and sells widgets to Division B and to outside customers. Division A has total costs of $35, $20 of which are variable. Division A is operating significantly below capacity and sells the widgets for $50.
Division B has received an offer from an outsider vendor to supply all the widgets it needs (20,000 widgets) at a cost of $45. The manager of Division B is considering the offer but wants to approach Division A first.

What is the minimum transfer price from Division A to Division B?





a.$20
b.35
c.45
d.50

Explanation / Answer

it is just the variable price so its $20

a) $20........(answer)

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