Electro Ltd has two divisions: Metal and Assembly. The Metal division transfers metal rolls to the Assembly division at a predetermined transfer price. The Metal division’s standard variable production cost per tonne is $450 and variable selling cost is $10. The Metal division can sell all its metal rolls to outside buyers at $860 per tonne in a competitive market. The Metal division has the capacity to produce 10,000 tonnes of metal rolls per year and currently sells 8,000 tonnes of metal rolls to external customers but none to Assembly division.

Assembly Division has approached Metal Division to purchase 2,000 tonnes of metal rolls. Based on the general transfer price rule, the per unit transfer price is: