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Find the lowest acceptable transfer price

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Question - Barter's Northern Division manufactures and sells a single product, which is a part used in the manufacture of trucks. The annual production capacity is 35,000 units and the variable cost of each unit is $24. Currently, the Northern Division sells 32,000 units per year to outside customers at a price of $40 per unit. Barter's Southern Division wishes to purchase 15,000 units per year from the Northern Division for use in its production. There would be no variable cost savings from transferring the units internally rather than selling them externally. Find the lowest acceptable transfer price from the Northern Division's (seller's) perspective?

Reference no: EM133094981

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