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What is the appropriate transfer price for each of the units

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Reference no: EM132827841

Problem 1: Division A of the Helpful Corporation manufactures product AL57. The division has no idle capacity and can sell all it can produce at $39 per unit. Division B would like to purchase 5,000 units of AL57 from Division A and is negotiating the transfer price. Division A normally has to pay $9 in transportation costs to sell to third-parties. It would not have to pay the $9 in transportation costs if it were to sell the units to Division B. What is the appropriate transfer price for each of the units, assuming Division A sells internally?

Reference no: EM132827841

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