Reference no: EM13582669

MUSC Company has two divisions, South and East. South produces a unit that East could use in its production. East currently is purchasing 50,000 units from an outside supplier for $50. South is operating at less than full capacity and has variable costs of $27 per unit. The full cost to manufacture the unit is $38. South currently sells 450,000 units at a selling price of $54. If an internal transfer is made, variable costs of $2 shipping and administrative could be avoided. What would be the minimum transfer price? 2) Alma Inc. has revenues of $750,000 resulting in an operating income of $52,500. Average invested assets total $375,000; the cost of capital is 10%. The profit margin is 3) MSUM Corp. has two divisions, East and West. East produces a gadget that West could use in its production. West currently purchases 100,000 gadgets for $25 on the open market. East's variable costs are $12 per widget while the full cost is $18.70. East sells gadgets $26 each. If East is operating at less than full capacity, what would be the minimum transfer price East would accept for an internal transfer?