10-2

The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to external customers for $32 per unit. Variable costs for the casing are $19 per unit and fixed cost is $4 per unit. Cotwold executives would like for the Molding Division to transfer 15,000 units to the Assembly Division at a price of $24 per unit. Assume the Molding Division is operating at full capacity. Required: 1. Should it accept the transfer price proposed by management? Yes O NO 2. Identify the minimum transfer price that the Molding Division will accept. Minimum Transfer Price