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What is the minimum transfer price

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Reference no: EM132913488

Question - The machining division of ITA International has a capacity of 2,430 units. Its sales and cost data are:

Selling price per unit $85

Variable manufacturing costs per unit25

Variable selling costs per unit 5

Total fixed manufacturing overhead 185,000

The machining division is currently selling 2,230 units to outside customers, and the assembly division of ITA International wants to purchase 400 units from machining. If the transaction takes place, the variable selling costs per unit on the units transferred to assembly will be $0/unit, and not $5/unit. ?he units being requested are special high-performance units, and the division's variable cost would be $23 per unit. What is the minimum transfer price that the machining division should accept?

Reference no: EM132913488

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