Winek Company's Tackle division has collected the following information: Normal selling price $18 per box
Variable product costs 10.25 per box
Fixed product costs 3.50 per box
Variable selling and administrative costs 2.75 per box
The Tackle division has no excess capacity.Winek's Little Fisherman division sells completed fishing kits for children and wants to purchase 100,000 tackle boxes.The minimum transfer price would be
A)$18.00
B)$16.50
C)$13.00
D)$8.00

Question

Quizplus · Accepted Answer

The minimum transfer price should cover the opportunity cost of selling externally, which is the normal selling price of $18 per box, since the Tackle division has no excess capacity.

Winek Company's Tackle Division Has Collected the Following Information: Normal