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(3) There are two divisions in Ralph Co. Division A has a product that can be sold either to outside customers or to Division B.
(3) There are two divisions in Ralph Co. Division A has a product that can be sold either to outside customers or to Division B. The company uses the opportunity cost approach to determine transfer price. information about these divisions is given beiow: Case 1 Case 2 Division A: Capacity in units Number of units sold externally Market selling price Variable costs per unit Fixed costs per unit based on capacity 10,000 10,000 10,000 6,000 $100 $125 72 10 60 10 Division B: 4,000 Number of units needed for production Purchase price per unit from external supplier 4,000 $95 $90 , and the maximum transfer (a) la Case 1, the minimum transfer price is t price is $ (b) In Case 2, the minimum transfer price is $ price is $
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