Sarah Is the Production Manager for Smith Corp

Essay

Sarah is the production manager for Smith Corp., and she is working on some pricing proposals for internal and external customers. Sarah is in charge of the Red Business Unit who produces spools of red yarn. They currently supply many craft stores in the area, have had a very busy year, and are operating at capacity. The manager of the Scarf Division, an internal business unit for Smith Corp. has asked if Sarah could fill an order for 5,700 spools of red yarn for them. Sarah has collected the following information to determine how to proceed: Sales to external customers (32,900 spools): $156,780, Variable Costs: $109,570, and Fixed Costs: $33,662. If Sarah wants to provide a quote to the Scarf Division, what is the minimum acceptable transfer price? (Do not round intermediate calculations.)