Pert Corporation manufactures state-of-the-art DVD players. It is a division of Vany TV, which manufactures televisions. Pert sells the DVD players to Vany, as well as to retail stores. The following information is available for Pert's DVD player: variable cost per unit $200; fixed costs per unit $150; a selling price of $500 to outside customers. Vany currently purchases DVD players from an outside supplier for $460 each. Top management of Vany would like Pert to provide 50,000 DVD players per year at a transfer price of $200. Instructions: Compute the minimum transfer price that Pert should accept under each of the following assumptions:
1. Pert is operating at full capacity.
2. Pert has sufficient excess capacity to provide the 50,000 players to Vany. Also indicate whether the proposed internal transfer should occur.