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What would be the maximum transfer price per unit

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Reference no: EM132510567

Division A produces a product that it sells to the outside market. It has compiled the following:

Variable manufacturing cost per unit $8

Variable selling costs per unit$3

Total fixed manufacturing costs$145000

Total fixed selling costs$30000Per unit

selling price to outside buyers$46

Capacity in units per year30000

Question 1: Division B of the same company is currently buying an identical product from an outside provider for $44 per unit. It wishes to purchase 5300 units per year from Division A. Division A is currently selling 24700 units of the product per year. If the internal transfer is made, Division A will not incur any selling costs. What would be the maximum transfer price per unit that Division B would be willing to accept?

 

Reference no: EM132510567

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