The Wood Division of Fir Products, Inc.manufactures rubber moldings and sells them externally for $55.Its variable cost is $25 per unit, and its fixed cost per unit is $7.Fir's president wants the Wood Division to transfer 5,000 units to another company division at a price of $32.
-Assuming the Wood Division does not have any available capacity, the minimum transfer price it should accept is

Question

Quizplus · Accepted Answer

The minimum transfer price should cover the opportunity cost of selling externally, which is the external selling price of $55, since the division does not have available capacity.