What would be the maximum transfer price per unit

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

Variable manufacturing cost per unit $12

Variable selling costs per unit $3

Total fixed manufacturing costs $158000

Total fixed selling costs $30000

Per unit selling price to outside buyers $57

Capacity in units per year 30000

Division B of the same company is currently buying an identical product from an outside provider for $55 per unit. It wishes to purchase 4900 units per year from Division A. Division A is currently selling 25100 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: EM133066224

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