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1 5 - 4 8 . Transfer Pricing: Performance Evaluation Issues LO 1 5 - 2 , 3 ) LGA's Energy Division is operating at
Transfer Pricing: Performance Evaluation Issues
LO
LGA's Energy Division is operating at capacity. It has been asked by Products Division to supply it a thermal switch, which Energy sells to its regular customers for $ each. Products, which is operating at percent capacity, is willing to pay $ each for the switch. Products will put the switch into a sensor that it is manufacturing on a costplus basis for a larger manufacturing firm, based in South America. Energy has a $ variable cost of producing the switch.
The cost of the sensor as built by Products follows:
tablePurchased partsoutside vendors,$
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