Tuttle motorcycles inc. manufactures and sells high-priced motorcycles. the engine division produces and sells engines to other motorcycle companies and internally to the production division. it has been decided that the engine division will sell 20,000 units to the production division at $1,050 a unit. the engine division, currently operating at capacity, has a unit sales price of $2,550 and unit variable costs and fixed costs of $1,050 and $750, respectively. the production division is currently paying $2,400 per unit to an outside supplier. $90 per unit can be saved on internal sales from reduced selling expenses. what is the minimum transfer price that the engine division should accept?

The minimum price is $960 per unit

Explanation:

Giving the following information:

The Engine Division, currently operating at capacity, has a unit sales price of $2,550 and unit variable costs and fixed costs of $1,050 and $750, respectively. The Production Division is currently paying $2,400 per unit to an outside supplier. $90 per unit can be saved on internal sales from reduced selling expenses.

Because there is unused capacity, we will no have into account the fixed costs.

Variable cost= 1,050 - 90= $960

The minimum price is $960

the answer would be voluntary exchange -

"the act of buyers and sellers freely and willingly engaging in market transactions. moreover, transactions are made in such a way that both the buyer and the seller are better off after the exchange than before it occurred."

hope this : )

-shy