The Soccer Investment Center of Nike manufactures and sells soccer hats and soccer balls. The Soccer Hats
Question:
The Soccer Investment Center of Nike manufactures and sells soccer hats and soccer balls. The Soccer Hats Profit Center incurs the following costs for the production of a single soccer hat when 10,000 soccer hats are produced each year:
Direct materials $2.75 |
Direct labor 1.50 |
Variable overhead .75 |
Fixed overhead 1.00 |
| Variable selling 3.50
|
Total Cost $9.50
The Soccer Hats Profit Center sells the soccer hats to retail stores for $12.50. The Soccer Balls Profit Center is doing a promotion whereby each customer that purchases a soccer ball during the World Cup receives a free soccer hat. The Soccer Balls Profit Center would like to purchase these soccer hats from the Soccer Hats Profit Center.
26. Assume that the Soccer Hats Profit Center has idle capacity. If they sell to the Soccer Balls Profit Center, the MINIMUM transfer price that should be chargedif variable selling costs would NOT be incurred on an internal transfer is?
