paden company has a division that manufactures a component that sells for $52 and has variable...
paden company has a division that manufactures a component that sells for $52 and has variable costs of $15 and fixed costs of $19. another division wants to purchase the component. what is the minimum transfer price if the division is operating at capacity? a. $19 b. $15 c. $34 d. $52
Homework Answers
Correct answer is option d.$52
When the division is operating at its capacity,the transfer price should be equals to,
= Contribution lost + Variable cost
=(52-15) + 15
=52
Which will be obviously equal to its selling price.
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