Question

Management of the catering company would like the food division to transfer 10,000 cans of its final product to the restaurant division for $30. the food division sells the product to customers for $70 per unit. the food division's variable cost per unit is $35 and its fixed cost per unit is $10. if the food division is currently operating at full capacity, what is the minimum transfer price the food division should accept?
a. $30



b. $35



c. $45



d. $70

Answer 1

Answer:

$35

Explanation:

Given:

Variable cost per unit = $35

Fixed cost per unit = $10

Sale price = $70

Computation:

Minimum Transfer price = $35

Company working on full capacity So, variable cost per unit is considered as the minimum transfer price.