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The Appraisal Department of Ivanhoe Mortgage Bank performs appraisals of business properties for loans being considered by the bank and appraisals for home buyers that

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The Appraisal Department of Ivanhoe Mortgage Bank performs appraisals of business properties for loans being considered by the bank and appraisals for home buyers that are financing their purchase through some other financial institution. The department charges $365 per home appraisal and its variable costs are $320 per appraisal. Recently, Ivanhoe Mortgage Bank has opened its own Home-Loan Department and wants the Appraisal Department to perform 1,340 appraisals on all Ivanhoe Mortgage Bank-financed home loans. Bank management feels that the cost of these appraisals to the HomeLoan Department should be $350. The variable cost per appraisal to the Home-Loan Department would be $10 less than those performed for outside customers due to savings in administrative costs. Determine the minimum transfer price assuming that the Appraisal Department has excess capacity. Minimum transfer price Determine the minimum transfer price assuming that the Appraisal Department has no excess capacity. Minimum transfer price $ Assuming that the Appraisal Department has no excess capacity, should management force the department to charge the HomeLoan Department only $350

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