The Hinges Division of Altoona Corporation sells 110,000 units of part Z-25 to the outside market. Part Z-25 sells for $100 and has a variable cost per unit of $52 and a fixed cost per unit of $10. The Hinges Division has a capacity to produce 175,000 units per period. The Door Division currently purchases 40,000 units of part Z-25 from the Hinges Division for $70. The Door Division has been approached by an outside supplier willing to supply the parts for $66. 

If Altoona uses a negotiated transfer pricing system, what is the minimum transfer price that should be charged for this transaction?

Answer rating: 100% (QA)

In a negotiated transfer pricing system the transfer price is determined through negotiations betwee... View the full answer