Wendy Limited, a Zambian based company / has two subsidiaries in Malawi and Mozambique. The subsidiary in
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Question:
Wendy Limited, a Zambian based company has two subsidiaries in Malawi and
Mozambique.
The subsidiary in Malawi produces specialist components and transfers them to
Mozambiquewerethey are assembled, packed and sold to the outside customers.
The production and sales volume may each be assumed to be units per
year nomatter where assembly and sales take place.
Variable manufacturing costs in Malawi are K per unit and fixedcosts for normal
rangeof production K million.
Additional assembly costs in Mozambique are Kper unit and fixed costs
K
The unit sales price in Mozambique is K to external customers.
Assuming a transfer price between the divisions of K per unit, calculate:
Cost and price data in all countries is shown in Zambian Kwacha
ai The total profit per year made by the company overall.
ii The profit per year made by each division,marks
b Define decentralization and briefly discuss its merits and demerits marks
c Briefly discuss any five possible objectives of transfer pricing
Related Book For
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr
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