The machining division of ITA International has a capacity of 2,330 units. Its sales and cost data are:
|
Selling price per unit
|
|
$ |
77 |
|
|
Variable manufacturing costs per unit
|
|
|
22 |
|
|
Variable selling costs per unit
|
|
|
7 |
|
|
Total fixed manufacturing overhead
|
|
|
213,300
|
|
The machining division is currently selling 2,050 units to outside customers, and the assembly division of ITA International wants to purchase 560 units from machining. If the transaction takes place, the variable selling costs per unit on the units transferred to assembly will be $0/unit, and not $7/unit. What should be the transfer price in order not to affect the machining division's current profit?