Question
Calculate the transfer price and analyze its impact on divisional profitability. Division Costs Sales Volume Transfer Price Division A (Seller) Variable costs: $100,000, Fixed costs:
Calculate the transfer price and analyze its impact on divisional profitability.
Division | Costs | Sales Volume | Transfer Price |
Division A (Seller) | Variable costs: $100,000, Fixed costs: $50,000, Production volume: 15,000 units | - | Cost plus 25% |
Division B (Buyer) | - | External market price: $150/unit | - |
Requirements:
Calculate the transfer price from Division A to Division B.
Analyze the impact of the transfer price on Division A's profitability.
Recommend a transfer pricing policy that maximizes overall corporate profitability.
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Management Accounting
Authors: Will Seal, Carsten Rohde, Ray Garrison, Eric Noreen
6th Edition
0077185536, 978-0077185534
