Segment V makes a part that it sells to customers outside of…
Segment V makes a part that it sells to customers outside of the company. Data concerning this part appear below: Selling price to outside customers $30 Variable cost per unit $12 Total Fixed Costs per month $20,000 Monthly capacity in units 17,000 Segment B of the same company would like to purchase the part produced by Segment V for use in one of Segment B’s products. Segment B currently purchases a similar part made by an outside vendor for $31 per unit and would substitute the part made by Segment V. Segment B requires 5000 units of the part each month, so they can add additional materials ($4 per unit), direct labor ($3 per unit), and variable overhead ($2 per unit) before selling to external customers for $50 per unit. Segment V has ample available capacity to produce the units for Segment B without any increase in fixed costs and without cutting into its sales to outside customers. What should be the lowest acceptable transfer price from the perspective of Segment V?