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Calculate the minimum transfer price

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Question - The Wood Division of Fir Products, Inc. manufactures rubber moldings and sells them externally for $55. Its variable cost is $25 per unit, and its fixed cost per unit is $7. Fir's president wants the Wood Division to transfer 5,000 units to another company division at a price of $32. Assuming the Wood Division has available capacity of 5,000 units, the minimum transfer price it should accept is

a) $7.

b) $25.

c) $32.

d) $55.

Please show the work. Thank you.

Reference no: EM131714186

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