The Can Division of Fruit Products Inc. manufactures and sells tin cans externally for $0.60 per can. Its unit variable costs and unit fixed costs are $0.24 and $0.08, respectively. The Packaging Division wants to purchase 50,000 cans at $0.32 a can. Selling internally will save $0.02 a can.

Assuming the Can Division is already operating at full capacity, what is the minimum transfer price it should accept?

a) $0.58
b) $0.28
c) $0.34
d) $0.66

Ans: a) $0.58