Retro Rides Inc

Retro Rides Inc. ,operates two divisions: (1) a management division that owns and manages classic automobile rentals in Miami,Florida and (2) a repair division that restores classic automobiles in Clearwater,Florida.The repair division works on classic motorcycles,as well as other classic automobiles.The Repair division has an estimated variable cost of $28.50 per labor-hour.The Repair division has a backlog of work for automobile restoration.They charge $48.00 per hour for labor,which is standard for this type of work.The Management division complained that it could hire its own repair workers for $30.00 per hour,including leasing an adequate work area.What is the minimum transfer price per hour that the Repair division should obtain for its services,assuming it is operating at capacity?

A) $28.50.
B) $30.00.
C) $39.00.
D) $48.00.

Correct Answer:

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