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Just 15-32 please 15-31. Evaluate Transfer Pricing System ( LO 15-2) San Jose Company operates a Manufacturing Division and an Assembly Division. Both divisions are
Just 15-32 please
15-31. Evaluate Transfer Pricing System ( LO 15-2) San Jose Company operates a Manufacturing Division and an Assembly Division. Both divisions are evaluated as profit centers. Assembly buys components from Manufacturing and assembles them for sale. Manufacturing sells many components to third parties in addition to Assembly. Selected data from the two operations follow. Required a. Current production levels in Manufacturing are 200,000 units. Assembly requests an additional 40,000 units to produce a special order. What transfer price would you recommend? Why? b. Suppose Manufacturing is operating at full capacity. What transfer price would you recommend? Why? c. Suppose Manufacturing is operating at 380,000 units. What transfer price would you recommend? Why? 15-32. International Transfer Prices ( LO 15-4) Refer to the information in Exercise 15-31. Suppose Manufacturing is located in Country A with a tax rate of 60 percent and Assembly in Country B with a tax rate of 40 percent. All other facts remain the same. Required a. Current production levels in Manufacturing are 200,000 units. Assembly requests an additional 40,000 units to produce a special order. What transfer price would you recommend? Why? b. Suppose Manufacturing is operating at full capacity. What transfer price would you recommend? Why? c. Suppose Manufacturing is operating at 380,000 units. What transfer price would you recommend? Why Step by Step Solution
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