The Wood Division of Fir Products, Inc. manufactures rubber moldings and sells them externally for $55. Its variable cost is $25 per unit, and its fixed cost per unit is $7. Fir's president wants the Wood Division to transfer 5,000 units to another company division at a price of $32.
Assuming the Wood Division does not have any available capacity, the minimum transfer price it should accept is
a) $55.
b) $25.
c) $32.
d) $7.
Ans: a) $55.
Min Transfer Price = VC + OCS.P. 55
V.C. 25
$30
25 + 30 = $55
Business
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