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The Plastics Division of Weston Company manufactures plastic molds and then sells them to customers for $70 per unit. Its variable cost is $30 per unit, and its fixed cost per unit is $10. Management would
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27 votes
The Plastics Division of Weston Company manufactures plastic molds and then sells them to customers for $70 per unit. Its variable cost is $30 per unit, and its fixed cost per unit is $10. Management would like the Plastics Division to transfer 10,000 of these molds to another division within the company at a price of $40. The Plastics Division has excess capacity of 10,000 units for plastic moldings. What is the minimum transfer price that the Plastics Division should accept

User Mitul Sheth
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1 Answer

14 votes
14 votes

Answer:

$30

Step-by-step explanation:

Based on the information given in a situation where the Plastics Division has 10,000 units as the excess capacity for plastic moldings in which the VARIABLE COST is $30 per unit which means that the MINIMUM TRANSFER PRICE that the Plastics Division should accept will be the

VARIABLE COST per unit amount of $30.

Therefore the MINIMUM TRANSFER PRICE that the Plastics Division should accept is $30

User Noontz
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