Heating division is operating at full capacity

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Reference no: EM13913606

The Heating Division of KLM International produces a heating element that it sells to its customers for $46 per unit. Its variable cost per unit is $20, and its fixed cost per unit is $7. Top management of KLM International would like the Heating Division to transfer 15,430 heating units to another division within the company at a price of $30. The Heating Division is operating at full capacity. Assume that the units being requested are special high-performance units, and that the division's variable cost would be $26 per unit. What is the minimum transfer price that the Heating Division should accept?

Reference no: EM13913606

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