Question
Explain the bases for setting a transfer price. b. Hello.Com has two independent Divisions that produce Butter & Ghee respectively. c. Division-1 produces Butter which
Explain the bases for setting a transfer price. b. Hello.Com has two independent Divisions that produce Butter & Ghee respectively. c. Division-1 produces Butter which it can sale to outsiders at BDT 25 each. The variable cost per unit to Division-1 is BDT 10 and fixed cost per unit is BDT 5 (It has already passed the Break Even point). The Division-2's profit markup is 40%. i. What is the Market Based Transfer Price? ii. What is the Minimum Transfer Price? iii. What is the Cost plus Transfer price? Hock Group has two divisions, Division P and Division Q. Division P manufactures an item that is transferred to Division Q. The item has no external market, and 60,000 units produced are transferred internally each year. The cost of division are as follows: Particulars Variable Cost per unit Fixed costs each year Division P Tk. 10 Tk. 120,000 Division Q Tk. 12 Tk. 90,000 Head office management decides that a transfer price should be set that provides a profit of Tk. 30,000 to Division P. What should be the transfer price per unit be
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started