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In the Compagnie Du Froid case, the French division produced and transferred ice cream to the Spanish division. The CEO used the Full Cost (Variable
In the Compagnie Du Froid case, the French division produced and transferred ice cream to the Spanish division. The CEO used the Full Cost (Variable Cost plus Overhead) as the basis of the transfer price. However, the CEO could have calculated the transfer price in other ways. a. Under what conditions does the use of Full Cost for the transfer price represent the economics of the exchange between France and Spain? b. Under what conditions does the use of market price for the transfer price represent the economics of this exchange? c. Under what conditions does the use of variable cost for the transfer price represent the economics of this exchange? (Minimum 1/2 page double spaced, maximum 1 page default spacing(1.15) - 1 point will be deducted if not followed)
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