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What is the minimum price it should charge

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Reference no: EM132717066

Question - Division A of book retailer DYMOCK LTD has operating data as follow:

Capacity 20,000 units

Selling price $80 per unit

Variable costs $45 per unit

Fixed costs $20 per unit

Division B wants to purchase units from division A. if division A agrees to sell units to division B, A's variable costs will be $5 less per units

Required -

1. If Division A has capacity available to meet B's requirements, what is the minimum price it should charge? Please show your workings.

2. Which transfer pricing system/approach potentially takes the most time to establish, and why?

Reference no: EM132717066

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