Question
Assume that Selling Division and Buying Division are both owned by Overall Corporation. Selling Division sells a product that is used by Buying Division and
Assume that Selling Division and Buying Division are both owned by Overall Corporation. Selling Division sells a product that is used by Buying Division and outside customers. Selling Division has 35,000 units of excess capacity. Selling Division currently sells the product for $30 per unit and Buying Division currently buys 35,000 units of the product from an outside source for $30 per unit. Variable costs of the product are $6, of which $1.5 is the cost of selling the product to an outside customer.
Using Selling price less avoidable costs as the minimum price, fill in the following formula for the desired transfer price: $fill in the blank 29ce5400a07806e_1 < transfer price < $fill in the blank 29ce5400a07806e_2.
Using Variable costs as the minimum price, fill in the following formula for the desired transfer price: $fill in the blank 29ce5400a07806e_3 < transfer price < $fill in the blank 29ce5400a07806e_4.
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