Question: Company E has two divisions, Division A and Division B. Division A is currently buying Component X from an external seller for $13. Division B

Company E has two divisions, Division A and Division B. Division A is currently buying Component X from an external seller for $13. Division B produces Component X and has excess capacity.

Using the following data, what would the transfer price per unit if Division A purchased Component X from Division B at the full-cost plus assuming 20% transfer price?

  • Variable cost per unit $6.82
  • Fixed cost per unit 1.54
  • Division B sales price of Component X 14.5

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