carney co.

Carney Co has two divisions, Division A and Division B. Division A currently manufactures component Y for the external market and works at full capacity. Division A has been asked to supply a different component, component X, to Division B.

Division B currently sources component X externally for $550 per unit. The same grade of materials and labour is used in both products. The cost cards for each component are shown below:

Component Y X
Selling price( of Y) 1,000
Direct materials ($30 per kg) 490 124
Direct skilled labour ($40 per hour) 250 200
Apportioned fixed overheads 85 90

Using an opportunity cost approach to transfer pricing, what is the minimum transfer price?

sir the answer is $532. But the point is no where has it been mentioned in the question that Labour is the limiting factor, which is what the answer has claimed. How do we know that labour is the limiting factor?