1. Delta Motors Inc.

Scenario: Transfer Pricing Strategy

Department Details:

• Department X (Manufacturing):
  • Variable Costs: $400,000
  • Fixed Costs: $200,000
  • Production Capacity: 30,000 units

• Department Y (Assembly):
  • Variable Costs: $350,000
  • Fixed Costs: $180,000
  • Demand: 25,000 units

Requirements:

• Evaluate the impact of adopting market-based transfer pricing versus cost-based transfer pricing on Delta Motors Inc.'s profitability. Provide a comparative analysis using a table format.