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Pharoah Industries is a decentralized firm. It has two production centres: Vancouver and Kamloops. Each one is evaluated based on its return on investment. Vancouver
Pharoah Industries is a decentralized firm. It has two production centres: Vancouver and Kamloops. Each one is evaluated based on its
return on investment. Vancouver has the capacity to manufacture units of component TR Vancouver's variable costs are
$ per unit. Kamloops uses component TR in one of its products. Kamloops adds $ of variable costs to the component and
sells the final product for $
Consider the following independent situations:
Vancouver can sell all units of TR on the open market at a price of $ per unit. Kamloops is willing to buy of
those units.
What should the transfer price be
Transfer price
$
per unit
eTextbook and Media
Of the units of component TR it can produce, Vancouver can sell units on the open market at a price of $
per unit. Kamloops is willing to buy an additional units.
What should the minimum transfer price be
Minimum transfer price
$
per unit
eTextbook and Media
Of the units of component TR it can produce, Vancouver can sell units on the open market at a price of $
per unit. Kamloops is willing to buy an additional units.
What should the transfer price beRound answer to decimal places, eg
Transfer price
per unit
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