The Heating Division of Indigo International produces a heating element that it sells to its customers for $47 per unit. Its unit variable cost is $22, and its unit fixed cost is $9. Top management of Indigo International would like the Heating Division to transfer 15,200 heating units to another division within the company at a price of $29. The Heating Division is operating at full capacity. Assume that the units being requested are special high-performance units, and the division's unit variable cost would be $24 (rather than $22). What is the minimum transfer price that the Heating Division should accept? Minimum transfer price $ 49

The Heating Division of Indigo International produces a heating element that it sells to its customers for $47 per unit. Its unit variable cost is $22, and its unit fixed cost is $9. Top management of Indigo International would like the Heating Division to transfer 15,200 heating units to another division within the company at a price of $29. The Heating Division is operating at full capacity. Assume that the units being requested are special high-performance units, and the division's unit variable cost would be $24 (rather than $22). What is the minimum transfer price that the Heating Division should accept? Minimum transfer price $ 49

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing

Section: Chapter Questions

Problem 4CE

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