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What is the minimum transfer price

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Reference no: EM133033530

Problem - The Heating Division of Kobe International produces a heating element that it sells to its customers for $38 per unit. Its variable cost per unit is $24, and its ?xed cost per unit is $7. Top management of Kobe International would like the Heating Division to transfer 15,200 heating units to another division within the company at a price of $29. The Heating Division is operating at full capacity. Assume that the units being requested are special high-performance units and that the division's variable cost would be $25 per unit (rather than $24). What is the minimum transfer price that the Heating Division should accept?

Reference no: EM133033530

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