Identify minimum transfer price that molding division accept

Reference no: EM131914858

Problem

The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to external customers for $28 per unit. Variable costs for the casing are $ 15 per unit and fixed cost is $3 per unit. Cotwold executives would like for the Molding Division to transfer 11,000 units to the Assembly Division at a price of $22 per unit.

Assume that the Molding Division is operating at full capacity.

Required:

1. Should it accept the transfer price proposed by management?

Yes
No

2. Identify the minimum transfer price that the Molding Division will accept.

Reference no: EM131914858

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