Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

5. Transfer pricing. Division A of Daku Corporation likes to purchase product ACE-23 from Division B of the corporation. Division A is currently purchasing 20,000

image text in transcribed

5. Transfer pricing. Division A of Daku Corporation likes to purchase product ACE-23 from Division B of the corporation. Division A is currently purchasing 20,000 units of ACE-23 from an outside at a unit cost of P50, less a 5% quantity discount. Other relevant information are provided below. Unit sales price on the intermediate market Unit variable cost Fixed costs per unit (based on capacity) Normal capacity P 50 24 12 70,000 Required: Suppose Division A can purchase the 20,000 material ACE-23 from a new supplier for P44, net of discount, what would be your recommendation to Division A, buy from Division B or from a new supplier, and at what price. (In your recommendation, the company's overall should be considered): 1. Assuming, Division B has excess capacity. 2. Assuming Division B has no excess capacity

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions