DJ has two divisions Engines and Tractors. The Engines Division makes engines for use in...
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Accounting
DJ has two divisions Engines and Tractors. The Engines Division makes engines for use in DJs Tractors. The Engine Div.s variable manufacturing cost is $6,200 per unit; fixed manufacturing costs are $300 per unit. The Engine Div. is currently working at 80% capacity. If the Tractor Division buys the engines on the external market, the cost is $7,000.
Using the general transfer pricing rule, what is the minimum price at which the Engine Div. would sell units to the Tractor Div.?
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