Use the data from BE8.7 but assume that the units being requested are special high-performance units, and the division’s unit variable cost would be $27 (rather than $25). What is the minimum transfer price that the Heating Division should accept?

BE8.7

The Heating Division of Kobe International produces a heating element that it sells to its customers for $45 per unit. Its unit variable cost is $25, and its unit fixed cost is $10. Top management of Kobe International would like the Heating Division to transfer 15,000 heating units to another division within the company at a price of $29. The Heating Division is operating at full capacity. What is the minimum transfer price that the Heating Division should accept?