The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to external customers for $45 per unit. Variable costs for the casing are $32 per unit and fixed cost is $6 per unit. Cotwold executives would like for the Molding Division to transfer 28,000 units to the Assembly Division at a price of $38 per unit. Assume the Molding Division is operating at full capacity. Required: 1. Should it accept the transfer price proposed by management?

• Yes

• No

2. Identify the minimum transfer price that the Molding Division will accept.

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