Auto-Lite Manufacturing, Inc., has a division in the United States that produces a variety of headlamps and
Question:
Auto-Lite Manufacturing, Inc., has a division in the United States that produces a variety of headlamps and interior light packages for automobiles. One type of headlamp for compact cars is transferred to a Manufacturing Division in Italy. The headlamps can be (and are) sold externally in the United States for \($25\) each. It costs \($0.75\) per headlamp for shipping and \($2.00\) per headlamp for import duties. When the headlamps are sold externally, Auto-Lite Manufacturing spends \($2.50\) per headlamp for commissions and an average of \($0.30\) per headlamp for advertising.
Required:
1. Which Section 482 method should be used to calculate the allowable transfer price?
2. Using the appropriate Section 482 method, calculate the transfer price.
Step by Step Answer:
Cost Management Accounting And Control
ISBN: 9780324233100
5th Edition
Authors: Don R. Hansen, Maryanne M. Mowen