Two Wheel Green Machines manufactures and sells bicycles. The tire manufacturing division sells its

product to customers for $15 each. The variable cost per tire is $7.50, and fixed costs per tire are $3.00.

The bicycle assembly division has been buying tires from an outside source for $14 each. Upper

management wants the tire division to transfer 50,000 tires to the assembly division within the company

at a price of $12 per tire. The tire division is operating at full capacity.

Instructions

Calculate the minimum transfer price that the tire division should accept.