Freddie Company, a division of Dorie Company, produces automotive batteries.

Freddie 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 Dorie Company would like Freddie to transfer 30,000 batteries to another division within the company at a price of $61.

Requirements 1. Determine the negotiable range for the transfer price.

2. Compute the minimum transfer price that Freddie should accept if it has excess capacity.

3. Compute the minimum transfer price that Freddie should accept if it is operating at full capacity.