The Heating Division ofCraneInternational produces a heating element that it sells to its customers for $40per unit. Its variable cost per unit is $28, and its fixed cost per unit is $7. Top management ofCraneInternational would like the Heating Division to transfer15,000heating units to another division within the company at a price of $35. Assume that the Heating Division has sufficient excess capacity to provide the15,000heating units to the other division. What is the minimum transfer price that the Heating Division should accept?

Minimum transfer price