Dake Bakery is purchasing heavy cream from an outside suppliers. The comapny's dairy division, which has no excess capacity, makes and sells heavy cream at a variable cost of $32 per gallon and a selling price of $59 per gallon. If the dairy division begins sales to the bakery, it willl use the general transfer pricing rule and will be able to reduce vvariable cost on internal transfer by $5 per gallon. How much is the minimum transfer price per gallon that the dairy division should establish?

Dake Bakery is purchasing heavy cream from an outside suppliers. The comapny's dairy division, which has no excess capacity, makes and sells heavy cream at a variable cost of $32 per gallon and a selling price of $59 per gallon. If the dairy division begins sales to the bakery, it willl use the general transfer pricing rule and will be able to reduce vvariable cost on internal transfer by $5 per gallon. How much is the minimum transfer price per gallon that the dairy division should establish?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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I need help with requirement 2 please.
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