#$2-3$

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Exercise $13-34$ General Transfer$-$Pricing Rule $($LO $13-6)$

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Illinois Metallurgy Corporation has two divisions. The Fabrication Division transfers partially completed components to the Assembly Division at a predetermined transfer price. The Fabrication Division$$s standard variable production cost per unit is $$460.$ The division has no excess capacity, and it could sell all of its components to outside buyers at $$590$ per unit in a perfectly competitive market.

required $1$

determine a transfer price using the general rule

transfer price

required $2$

what would be the transfer price if the fabrication division had excess capacity?

transfer price