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Intel Corporation has two divisions: Manufacturing and Sales. The Manufacturing Division produces microchips at a variable cost of $50 per unit and transfers them to
Intel Corporation has two divisions: Manufacturing and Sales. The Manufacturing Division produces microchips at a variable cost of $50 per unit and transfers them to the Sales Division, which sells them for $100 per unit. The company uses a transfer pricing policy based on 110% of the variable cost.
Requirements:
- Calculate the transfer price per unit.
- Determine the profit for the Manufacturing Division if it transfers 1 million units.
- Compute the profit for the Sales Division if it sells 1 million units.
- Analyze the overall company profit.
- Evaluate the impact of transfer pricing on divisional performance.
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