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What is the lowest acceptable in-house price

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Question - Flash E-Card Manufacturing manufactures software parts for the computer software systems that produce e-cards. The Flash II part is currently manufactured in the Computer Department. The Data Department also produces the part and the plant has excess capacity to produce the Flash II part. The current market price of the Flash II part is $1,400. The managerial accountant reported the following manufacturing costs and variable expense data:

Flash E-Card Manufacturing Manufacturing Costs and Variable Expense Report Flash Component

Direct materials $810

Direct labor $190

Variable manufacturing overhead $120

Fixed manufacturing overhead (current production level) $135

Variable selling expenses (only incurred on sales to outside consumers) $139

If the highest acceptable transfer price is $1400 in the market, what is the lowest acceptable in-house price the Data Department should receive to produce the part in-house at the Computer Department?

Reference no: EM132783176

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