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A division of a company is capable of making two products – X and Y.
They can sell both products externally as follows:
X Y
External selling price 80 100
Variable cost 60 70
Contribution per unit 20 30
Labour hours per unit 5 hours 10 hours
The company has limited labour hours available, and another division requires product Y.
What is the minimum transfer price that should be charged by the division in order to achieve goal congruence?
$70
$110
$100
$80
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