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What would be their minimum transfer price

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Reference no: EM133156151

Question - The Cooling Division of JOY International produces a cooling element that it sells to its customers for $18 per unit. Its variable cost per unit is $7, and its fixed cost per unit is $4. Top management of JOY International would like the Cooling Division to transfer 7,000 cooling units to another division within the company at a price of $10. The Cooling Division currently has excess capacity of 12,000 units.

a. What is the minimum transfer price that the Cooling Division should accept?

b. If the Cooling Division was operating at full capacity, what would be their minimum transfer price the Division should accept?

Reference no: EM133156151

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