I want profitability statements at both output levels with transfer price of both amounts and effects and profit summary .

Do not copy and paste

2. Profit Statements-Different TPs & Different Output Levels 4. Effect of Different Transfer Pricing Methods at Different Output Levels SWEETSMELL & CO, manufacturers of Agarbaihis, is organised into two trading groups, one handles Wholesale business and the other sells to Retailers. One of its products is SANDAL Agarbathi. The Wholesale Group makes the Agarbathi and sells it to external wholesale customers as well as to the retail group. The production capacity is 2,000 boxes per month but at present sales is limited to 1,000 boxes wholesale and 600 boxes retail. The Transfer Price was agreed at 200 per box in line with the external wholesale trade price on 1st July, which was the beginning of the budget year. As from 1st December, however, competitive pressure has forced the wholesale trade price down to 180 per box. Retail group's officials contend that the Transfer Price to them should be the same as for outside customers. The Wholesale Group refutes the argument on the basis that the original budget established the price for the whole budget year. The Retail Group makes 100 packets of Agarbathi from each box, which it sells at 4 per packet. It would sell a further 40,000 packets if the retail price were reduced to 3.20 per packet. Other data relevant to the operation are - Wholesale group Retail group Particulars 70 60 Variable Cost per box 40,000 1,00,000 Fixed Cost per month Required: 1. Prepare estimated Profit Statements for the month of December for each group and for the Company as a whole based on Transfer Prices of 200 per box and of * 180 per box, when producing at - (a) 80% capacity, and (b) 100% capacity utilising the extra sales to supply the retail trade. 2. What is the effect of the present Transfer Pricing system on the Company's profits? Scanned with CamScanner 2. Profit Statements-Different TPs & Different Output Levels 4. Effect of Different Transfer Pricing Methods at Different Output Levels SWEETSMELL & CO, manufacturers of Agarbaihis, is organised into two trading groups, one handles Wholesale business and the other sells to Retailers. One of its products is SANDAL Agarbathi. The Wholesale Group makes the Agarbathi and sells it to external wholesale customers as well as to the retail group. The production capacity is 2,000 boxes per month but at present sales is limited to 1,000 boxes wholesale and 600 boxes retail. The Transfer Price was agreed at 200 per box in line with the external wholesale trade price on 1st July, which was the beginning of the budget year. As from 1st December, however, competitive pressure has forced the wholesale trade price down to 180 per box. Retail group's officials contend that the Transfer Price to them should be the same as for outside customers. The Wholesale Group refutes the argument on the basis that the original budget established the price for the whole budget year. The Retail Group makes 100 packets of Agarbathi from each box, which it sells at 4 per packet. It would sell a further 40,000 packets if the retail price were reduced to 3.20 per packet. Other data relevant to the operation are - Wholesale group Retail group Particulars 70 60 Variable Cost per box 40,000 1,00,000 Fixed Cost per month Required: 1. Prepare estimated Profit Statements for the month of December for each group and for the Company as a whole based on Transfer Prices of 200 per box and of * 180 per box, when producing at - (a) 80% capacity, and (b) 100% capacity utilising the extra sales to supply the retail trade. 2. What is the effect of the present Transfer Pricing system on the Company's profits? Scanned with CamScanner