Reference no: EM132543082

Question - Yasmin Company has a Components Division which produces parts for product divisions within the company as well as for outside manufacturers. The company's Business Products Division has asked the Components Division to provide it with a new part, A79. Production data related to A79 are as follows:

Units needed by Business Products Division 20,000 units

Variable production cost $27 per unit

Allocated fixed production cost $3.50 per unit

Unfortunately, producing the new part requires the same production team within the Components Division that manufactures another part, B19, for outside customers. Data related to the production and sale of B19 to outside customers are below:

Units currently produced & sold 100,000 units

Selling price $70.00 per unit

Variable production cost $52.00 per unit

Variable selling cost $8.00 per unit

Allocated fixed production cost $2.00 per unit

Required - If the Components Division must reduce the production of B19 by 40% in order to produce all of the part A79 requested by the Business Products Division, what would be the minimum transfer price they should be willing to accept assuming there would be no impact to their fixed cost?