Lowest acceptable transfer price from perspective division

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Reference no: EM13143999

Division X of Charter Corporation makes and sells a single product that's used by manufacturers of forklift trucks. Presently it sells 12,000 units per year to outside customers at $24 per unit. The annual capacity is 20,000 units, and the variable cost to make each unit is $16. Division Y of Charter Corporation would like to buy 10,000 units a year from Division X to use in its products. There would be no cost savings from transferring the units within the company rather than selling them on the outside market. What should be the lowest acceptable transfer price from the perspective of Division X?

Reference no: EM13143999

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