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Negotiated Transfer Pricing Company ABC **Division 1 makes a product that is a component of the product manufactured by Division 2 Division 1 S/P: $125

Negotiated Transfer Pricing

Company ABC

**Division 1 makes a product that is a component of the product manufactured by Division 2

Division 1 S/P: $125 VCunit: $85 CM: $40

Division 2 Currently buys product for $120 from outside supplier; wants Div. 1 to sell them the product for $100 (7,500 units)

A. At capacity:

B. With Excess Capacity:

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