Calculate the minimum price per unit the company should accept.

1.       Moona Company has two divisions. Division A produces a component that it transfers to Division B, who uses the component in its main product. Division A incurs $400 in variable costs to manufacture each component, as well as $100,000 in fixed costs. Division B incurs $1,000 in variable costs in addition to the cost of the component to manufacture the main product, as well as $700,000 in fixed costs. Division A could sell the components on the market for $700. Moona sets its transfer prices at variable cost plus 40%. Calculate the transfer price.

2.       Annor Clothing wishes to place a stock of 100 holiday sweaters on clearance after the holiday season. The sweaters cost Annor $25, and sold for $50 during the holiday season. Annor will incur opportunity costs of $7 per sweater for rack space, and will spend $500 to advertise the clearance sale. Calculate the minimum price per unit the company should accept.

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