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What should be the transfer price

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Question - How do you do find the minimum transfer price?

The machining division of ITA International has a capacity of 2,310 units. Its sales and cost data are:

Selling price per unit - 80$

$80Variable manufacturing costs per unit - 25$

Variable selling costs per unit - 6$

Total fixed manufacturing overhead - 189,100$

The machining division is currently selling 2,020 units to outside customers, and the assembly division of ITA International wants to purchase 510 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 $6/unit. What should be the transfer price in order not to affect the machining division's current profit?

Reference no: EM131915273

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