The Phelan Division produces and sells a product to external and internal customers. Per-unit information about its operations include: Selling price per unit to external customers $250 Variable manufacturing costs per unit 115 Fixed manufacturing overhead costs per unit 70 If Phelan is operating at capacity and has unlimited external customer demand, what should be the (internal) transfer price for Phelan's product

Question

Business

Adriana Kemp

12 September, 08:43

The Phelan Division produces and sells a product to external and internal customers. Per-unit information about its operations include: Selling price per unit to external customers $250 Variable manufacturing costs per unit 115 Fixed manufacturing overhead costs per unit 70 If Phelan is operating at capacity and has unlimited external customer demand, what should be the (internal) transfer price for Phelan's product

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Answers (1)

Know the Answer?

Fletcher Calhoun · Answer 1

The answer is $250

Explanation:

Solution

From the example given, we are asked to find the internal transfer price of Phelan's product.

So, if Phelan is operating at capacity or speed and has unlimited external customer demand then the transfer price for Phelan's product is $250 as it has huge demand from customers