Question

Division A has the capacity for making 2851 motors per month and regularly sells 1936 motors...

Division A has the capacity for making 2851 motors per month and regularly sells 1936 motors each month on the intermediate market at a contribution margin of $60.43 per motor. A sister division, Division B, would like to obtain 1528 motors each month from Division A. In computing a transfer price per motor using the transfer pricing formula, the lost contribution margin per unit portion of the transfer price computation would be:

Select one:

a. $24.24

b. $60.43

c. $36.36

d. $48.49

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