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Proposed a transfer price

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Reference no: EM133075745

Problem:

Division S

Direct cost

$18.9

 

Fixed overhead absorbed

$6.4

 

 

$25.3

 

Standard profit @ 10%

$2.53

 

Transfer price

$27.83

Division S has proposed a transfer price of $27.83 per unit, for goods which it supplies to Division R (based on the calculations in the table above).

Division R, the receiving division, can buy externally at $26.4.

If the absorbed overheads above are general in nature, the transfer price needs to be amended between $18.9 and x(?)  Enter the amount of x in the answer space below

Reference no: EM133075745

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