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Division A of Book retailer Dymocks Ltd has operating data as follows: Capacity 20,000 units Selling price $80 per unit Variable costs $45 per unit
Division A of Book retailer Dymocks Ltd has operating data as follows: Capacity 20,000 units Selling price $80 per unit Variable costs $45 per unit Fixed costs $20 per unit Division B wants to purchase units from Division A. If Division A agrees to sell units to Division B, A's variable costs will be $5 less per unit. Required: 1. If Division A has capacity available to meet B's requirements, what is the minimum price it should charge? Please show your workings. [4 marks] 2. Which transfer pricing system/approach potentially takes the most time to establish, and why? (3.5 marks]
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