FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:Hu Corporation has two operating divisions, A and B. The following information is provided for Division A:
Unit selling price $200
Unit variable
$120
costs
Unit fixed costs
$ 40
Division B uses the type of product produced by Division A and has approached Division A about buying the product internally. Division B is currently paying $180 to purchase the product from an outside source. If Division A sells internally, it can
save $5 per unit in variable costs. Assuming Division A is operating at capacity, what price should it charge Division B if the transfer is to be made?
Multiple Choice
$115
$195
$125
$200
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