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Post Division: Quantity demanded by outside customers 500,000 posts Quantity wanted by Lamp Division 25,000 posts Selling price per post to outside customers $150 Variable
Post Division:
Quantity demanded by outside customers 500,000 posts
Quantity wanted by Lamp Division 25,000 posts
Selling price per post to outside customers $150
Variable cost per post $ 55
Fixed operating costs per unit (at capacity) $ 15
Capacity is 800,000 and none of the variable cost can be avoided on an intracompany sale.
What is the minimum transfer price per post that the Post division should charge the Lamp Division.
$47 | ||
$55 | ||
$62 | ||
$70 | ||
$150 |
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