Chipper Division of Acme Corp. sells 80,000 units of part Z-25 to the outside ma

Question

Chipper Division of Acme Corp. sells 80,000 units of part Z-25 to the outside market. Part Z-25 sells for $40, has a variable cost of $22, and a fixed cost per unit of $10. Chipper has a capacity to produce 100,000 units per period. Jones Division currently purchases 10,000 units of part Z-25 from Chipper for $40. Jones has been approached by an outside supplier willing to supply the parts for $36. If Acme uses a negotiated transfer pricing system, what is the minimum transfer price that should be charged for this transaction? A. $40 B. $36 C. $32 D. $22

Explanation / Answer

Answer

what is the maximum transfer price that should be charged for this transaction/

Maximum price = $36

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