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What should be the transfer price in order

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Reference no: EM131116096

1) The machining division of ITA International has a capacity of 2,280 units. Its sales and cost data are:

The machining division is currently selling 2,060 units to outside customers, and the assembly division of ITA International wants to purchase 520 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 $3/unit.

Selling price per unit
 $ 75
Variable manufacturing costs per unit
 30
Variable selling costs per unit
 3
Total fixed manufacturing overhead
 178,300

What should be the transfer price in order not to affect the machining division's current profit?

Reference no: EM131116096

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