Computing transfer prices The Disk Division of the Business Products Corporation sells all of its output to the Retail Sales Division of the company. The only product of the Disk Division is floppy disks used in word processors and computers. The disks are sold in cases. The Retail Sales Division sells the floppy disks for $95 per case. Below are production and cost data from the Disk Division for the production of disks during 1992.

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Cases of disks manufactured Prime costs... Manufacturing overhead (20 percent variable) Operating expenses (40 percent variable). 50,000 $1,400,000 800,000 750,000