You have been given the assignment to read Beer School: Bottling Success at The Brooklyn Brewery. Upon completion of reading this informative book dealing with this real life rags to riches entrepreneurial….
Calculate the transfer price.
Gruber Corporation manufactures the components of its products at its Parts Manufacturing division. Each component costs $15 in variable costs to produce. The components are transferred to the Assembly division, where they are assembled into the final product, which costs $30 per unit, plus the cost of components from the Parts Manufacturing division. Fixed costs are $200,000 for Parts Manufacturing and $350,000 for Assembly. The Parts Manufacturing division could sell the components on the market for $25. Gruber sets its transfer prices at variable cost plus 20%. Calculate the transfer price.