Division A of Hoover Inc. transfers its product to Division B. Calculate the minimum transfer price division A should charge for internal transfers and the maximum price division B is willing to pay.
Division A of Hoover Inc. transfers its product to Division B. Division B can either buy the item internally or externally (cost = $75 each). Division A has just completed its annual cost update as follows: Direct material $25.00 Direct labor 18.75 Variable manufacturing overhead 6.25 Fixed manufacturing overhead