The Heating Division of Kobe International produces a heating element that it sells to its customers for $45 per unit. Its variable cost per unit is $27, and its fixed cost per unit is $6. Top management of Kobe International would like the Heating Division to transfer 14,800 heating units to another division within the company at a price of $26. Assume that the Heating Division has sufficient excess capacity to provide the 14,800 heating units to the other division. What is the minimum transfer price that the Heating Division should accept?

The Heating Division of Kobe International produces a heating element that it sells to its customers for $45 per unit. Its variable cost per unit is $27, and its fixed cost per unit is $6. Top management of Kobe International would like the Heating Division to transfer 14,800 heating units to another division within the company at a price of $26. Assume that the Heating Division has sufficient excess capacity to provide the 14,800 heating units to the other division. What is the minimum transfer price that the Heating Division should accept?

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 17E: Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside...

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