Explain what should be the lowest acceptable transfer price, Accounting Basics

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Explain what should be the lowest acceptable transfer price

Division A of smith company has the capacity for making 3,000 motors per month and regularly sells 1,950 motors each month to outside customers at a contribution margin of $62 per motor. The variable cost per motor is $35.70. division B of smith company would like to obtain 1,400 motors each month from Division A.

A. What should be the lowest acceptable transfer price from the perspective of Division A?

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Accounting Basics: Explain what should be the lowest acceptable transfer price

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Accounting Basics: Explain what should be the lowest acceptable transfer price

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