What the economic rule would set the transfer price as

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The Rubber Division of Morgain Company manufactures rubber moldings and sells them externally for $40. At the current level of production, its variable cost is $18 per unit, and its fixed cost per unit is $15. Morgain's president wants the Rubber Division to transfer 5,000 units to another company division.

Problem 1: Assuming the Rubber Division has available capacity for 5,000 additional units, the economic rule would set the transfer price as:

Option 1: $33
Option 2: $40
Option 3: $15
Option 4: $18

Reference no: EM132814773

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