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What is the lowest transfer price per unit

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Question - The wood Division produces lumbar which can be sold to outside customers or transferred to the paper Division. The following data are available for last year's activities in the wood Division:

Capacity in units 400,000 wood pieces

Outside demand 380,000 wood pieces

Demand by Flag Division 25,000 wood pieces

Selling price $5.00

Variable cost $2.75

Total fixed costs $200,000

On a transfer to the paper Division, the wood Division can save $0.65 of the variable costs per unit transferred. What is the lowest transfer price per unit?

Reference no: EM132599849

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