Machining division-what is the minimum transfer price

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Reference no: EM131294911

The machining division of ITA International has a capacity of 2,130 units. Its sales and cost data are:

Selling price per unit: $75

Variable manufacturing costs per unit: $20

Variable selling costs per unit: $4

Total fixed manufacturing overhead: $197,000

The machining division is currently selling 1,910 units to outside customers, and the assembly division of ITA International wants to purchase 350 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 $4/unit. What should be the transfer price in order not to affect the machining division’s current profit? (Round answer to 2 decimal places e.g. 5.25.)

What is the minimum transfer price?

Reference no: EM131294911

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