Hawkeye runs a chain of drive in ice cream stands. They rented an ice cream machine for summer for $3,600. The manager of the ice cream machine charges the stand $4 per gallon.
Sales to the stands (16,000 gal @ $4) 64,000
Variable costs at $2.10 per gal 33,600
Fixed Costs
Rental of Machine 3,600
Other Fixed Costs 10,000 47,200
Operation Margin 16,800
They are seeking permission to buy ice cream from outside supplier at $3.35 per gallon.They uses 4,000 gallons of ice cream. Other fixed costs of operating the machine will decrease by $900. Form an analysis fo the request in terms of overall company objectives and explain the conclusion. What isthe transfer price?