Division X of Cathy Corporation makes and sells a single product which is used by manufacturers of fork lift trucks. Presently it sells 14,000 units per year to outside customers at P 24 per unit. The annual capacity is 20,000 units and the variable cost to make each unit is P 15.40 Division Y of Cathy Corporation would like to buy 10,000 units a year from Division X to use in its products. There would be no cost savings from transferring the units within the company rather than selling them on the outside market. The lowest acceptable transfer price from the perspective of Division X would be P per unit (round off to 2 decimal places)

Division X of Cathy Corporation makes and sells a single product which is used by manufacturers of fork lift trucks. Presently it sells 14,000 units per year to outside customers at P 24 per unit. The annual capacity is 20,000 units and the variable cost to make each unit is P 15.40 Division Y of Cathy Corporation would like to buy 10,000 units a year from Division X to use in its products. There would be no cost savings from transferring the units within the company rather than selling them on the outside market. The lowest acceptable transfer price from the perspective of Division X would be P per unit (round off to 2 decimal places)

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 11E

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