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What should be the minimum acceptable transfer pricer

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Reference no: EM132997671

Question - Company has a Senior Division that manufactures and sells a number of products, including a standard sensor that could be used by another division in the company, the Safety Products Division, in one of its products. Data concerning the sensor appear below:

Capacity in units 58,000

Selling price to outside customers $64

Variable cost per unit $20

Fixed cost per unit (based on capacity) $17

The safety products division is currently purchasing 3,000 of these sensors per year from an overseas supplier at a cost of $59 per sensor. Assume that the senior division is selling all of the sensors it can produce to outside customers. What should be the minimum acceptable transfer pricer the sensors from the standpoint of the Senior Division.

Reference no: EM132997671

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