Shining Springs Glass Art manufactures various glass art fixtures, including a dolphin-glass figurine. The dolphin-glass figurine is produced in the Design Department and it uses a glass insert that is produced also in the Production Department

The market price for the glass insert is $900. The plant has excess capacity and the managerial accountant reported the following information:

What is the lowest acceptable in-house transfer price to the Production Department? What is the highest acceptable transfer price the Design Department should pay the Production Department to produce the insert in-house?? What should the managerial accountant understand if there was not access capacity at the plant to produce the insert?

The highest transfer price that Shining Springs Glass Art should pay is the market price, $900. The lowest in-house transfer price to the Production Department is $1,065. If there was no excess capacity, the fixed costs to produce the insert would increase as a result of the extra production volume at the plant. The fixed cost is then a relevant cost.
Explanation: [$825 + 105 + $135 ) = $1,065