contestada

The Heating Division of Kobe International produces a heating element that it sells to its customers for $38 per unit. Its variable cost per unit is $20, and its fixed cost per unit is $12. Top management of Kobe International would like the Heating Division to transfer 15,400 heating units to another division within the company at a price of $30. Assume that the Heating Division has sufficient excess capacity to provide the 15,400 heating units to the other division. What is the minimum transfer price that the Heating Division should accept?

Respuesta :

sadddamkashmiri801

Answer:

$30,800

Explanation:

The transfer price can be calculated using the following Formula if the division is working at full capacity:

Least Transfer Price = Variable cost per unit + Contribution lost Per unit

But in this scenario, the company is not operating at full capacity. So the there are no contribution losses due to this sale of product to the division.

Here

Variable cost per unit is $20

Contribution Lost is zero

By putting values, we have:

Least transfer price = $20 per unit + $0 per unit = $20 per unit

Total transfer price for 15,400 units = 15,400 * $20 per unit = $30,800

This is the minimum transfer price that Heating Division should accept.

Otras preguntas