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In the Bombadier Company, Division A has a product that can be sold either to outside customers or to Division B. Information about these divisions
In the Bombadier Company, Division A has a product that can be sold either to outside customers or to Division B. Information about these divisions is given below: Case 1 100,000 100,000 P90 73 10 40,000 P86 Case 2 Division A: Capacity in units Number of units sold externally Market selling price Variable costs per unit Fixed costs per unit based on capacity 100,000 60,000 P75 58 10 Division B: Number of units needed for production Purchase price per unit from external supplier 40,000 P74 1. The company uses the opportunity cost approach to transfer pricing. What is the minimum transfer price in Case 1? a. P90 b. P73 c. P83 d. P86 2. The company uses the opportunity cost approach to transfer pricing. What is the maximum transfer price in Case 1? a. P90 b. P91 c. P83 d. P73 3. The company uses the opportunity cost approach to transfer pricing. What is the minimum transfer price in Case 2? a. P58 b. P74 c. P68 d. P75 4. The company uses the opportunity cost approach to transfer pricing. What is the maximum transfer price in Case 2? a. P75 b. P68 c. P74 d. P58
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