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What is the minimum and transfer price

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Problem - Assume a manufacturer has a maximum capacity of 200,000 units and is currently operating at 90% capacity. The unit manufacturing cost follows:

Sales Price $75.00

Direct Materials 15.00

Direct Labor 10.00

Variable manufacturing overhead 15.00

Fixed manufacturing overhead 18.00

The purchasing division (downstream) purchases the component for $70 from an outside supplier. Assume a downstream sister division has contacted the manufacturer about an order for 25,000 units. What is the minimum and transfer price?

Reference no: EM132885651

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