Determine the mutually beneficial transfer price

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Reference no: EM131211290

The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to external customers for $37 per unit. Variable costs for the casing are $12 per unit and fixed cost is $5 per unit. Cotwold executives would like for the Molding Division to transfer 20,000 units to the Assembly Division at a price of $31 per unit. Assume that the Molding Department has excess capacity, but the Assembly Department requires the casing to be made from a specific blend of plastics. This would raise the variable cost per unit to $33.

Determine the mutually beneficial transfer price so that the two divisions equally split the profits from the transfer. (Round your answer to 2 decimal places.)

Reference no: EM131211290

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