Question
Yukon, Inc., has a division in Canada, the Exterior Stain Division, which makes long-lasting exterior wood stain. Yukon has another U.S. division, the Retail Division,
Yukon, Inc., has a division in Canada, the Exterior Stain Division, which makes long-lasting exterior wood stain. Yukon has another U.S. division, the Retail Division, which operates a chain of home improvement stores. The Retail Division would like to buy the unique, longlasting wood stain from the Exterior Stain Division since this type of stain is not currently available. The Exterior Stain Division incurs manufacturing costs of $13.45 for one gallon of stain. If the Retail Division purchases the stain from the Exterior Stain Division, the shipping costs will be $1.40 per gallon, but sales commissions of $0.75 per gallon will be avoided with an internal transfer. The Retail Division plans to sell the stain for $32.80 per gallon. Normally, the Retail Division earns a gross margin of 35 percent above cost of goods sold.
Calculate the appropriate transfer price per gallon. (Round to the nearest cent.)
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