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What transfer price should be used on transfers

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Question: The Windshield division of Cargo Co. makes windshields for use in Cargo's Assembly division. The Windshield division incurs variable costs of $350 per windshield and has capacity to make 100,000 windshields per year. The market price is $600 per windshield. The Windshield division incurs total fixed costs of $3,000,000 per year. If the Windshield division is operating at full capacity, what transfer price should be used on transfers between the Windshield and Assembly divisions? Explain.

Reference no: EM131538710

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