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Freberg Company, a division of Dudge Cars, produces automotive batteries. Freberg sells the batteries to its customers for $92 per unit. The variable cost per unit is $55, and fixed costs per unit are $16. Top management of Dudge Cars would like Freberg to transfer 30,000 batteries to another division within the company at a price of $61. Freberg has sufficient excess capacity to provide the 30,000 batteries to the other division. Compute the minimum transfer price that Freberg should accept.

Respuesta :

TomShelby

Answer:

Minimun transfer price = 55

Explanation:

Transfer cost = Marginal cost + Opportunity cost

There are space capacity, so there is no opportunity cost. The division will not choose between selling to this division or customer.

This means, the maginal cost will be the minimun transfer cost.

Marginal cost: cost of producing an additional unit.

This will be the variable cost, because the fixed cost are incurred already, regardless of the transfer or not.

Minimun transfer price = 55

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