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    Determine the minimum transfer price

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    The heating division of the ITA international produces a heating element that it sells to its customers for $42 per unit. Its variable cost per unit is $19, and its fixed cost per unit is $10. Top management of ITA International would like the Heating Division to transfer 15,000 heating units to another division within the company at a price of $29. The heating Division is operating at full capacity. What is the minimum transfer price that the Heating Division should accept?

    Use the data from the above, but assume that the division has sufficient excess capacity to provide the 15,000 heating units to the other division. What is the minimum transfer price that the Heating Division should accept?
    Please provide steps to finding the answer, not just the answer.

    Cheers...

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    https://brainmass.com/business/accounting/determine-minimum-transfer-price-287525

    Solution Preview

    Dear student,

    1) Sale price = 42
    less:variable cost=19
    contribution=23
    less:fixed cost=10
    profit=13
    If the division ...

    Solution Summary

    The expert determines the minimum transfer price.

    $2.19

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