The California Instruments Corporation, a producer of electronic equipment, makes pocket calculators in a plant that is run autonomously.The California Instruments Corporation, a producer of electronic equipment, makes pocket calculators in a plant that is run autonomously. The plant has a capacity output of 200,000 calculators per year, and the plant's manager regards 75 percent of capacity as the normal or standard output. The projected total variable costs for the normal or standard level of output are $900,000, while the total overhead or fixed costs are estimated to be 120 percents of total variable costs. The plant manager wants to apply a 20 percent markup on cost.
If California Instruments wants to add the pocket calculator to its own product line, what should be the transfer price of the pocket calculators?