Nuvox corporation manufactures car stereos it is a division

Reference no: EM13567600

NuVox Corporation manufactures car stereos. It is a division of Lambda Motors, which manufactures vehicles. NuVox sells car stereos to Lambda, as well as to other vehicle manufacturers and retail stores. The following information is available for NuVox's standard unit: variable cost per unit $35, fixed cost per unit $24, and selling price to outside customers $86. Lambda currently purchases a standard unit from an outside supplier for $81. Because of quality concerns and to ensure a reliable supply, the top management of Lambda has ordered NuVox to provide 197,900 units per year at a transfer price of $35 per unit. NuVox is already operating at full capacity. NuVox can avoid $4 per unit of variable selling costs by selling the unit internally.

What is mimimum transfer price Nuvox should accept?

Reference no: EM13567600

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