The Windshield division of Chee Cycles makes windshields for use in Chees Assembly division. The Windshield division
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The Windshield division of Chee Cycles makes windshields for use in Chee’s Assembly division. The Windshield division incurs variable costs of $175 per windshield and has capacity to make 50,000 windshields per year. The market price is $300 per windshield. The Windshield division incurs total fixed costs of $1,500,000 per year. If the Windshield division is operating at full capacity, what transfer price should be used on transfers between the Windshield and Assembly divisions? Explain.
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