Question

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 $42, 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 $54. Freberg is operating at full capacity. Compute the minimum transfer price that Freberg should accept. Minimum transfer price $

Answer 1

The minimum transfer price is $92

Step-by-step explanation:

Minimum transfer price = Variable cost + Opportunity cost

= $42 + $(92-42)

= $42 + $50

= $92