please check the attachments. The question and answer is already there,I just need the explanation of how the numbers are there ,showing the calculation of the results and the concept of the math as it is the math from as it is from transfer pricing math from managerial accounting.Regrds

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use the following information to answer questions a) - e) below: Capacity of supplying division 43,750 Search 'Insert Page' Market sell price (per tonne] $1, 340 LO LILULL I VI Cost of production: Variable cost (mfg) Variable labour $170 Comment Variable material $340 Variable overhead $20 Total va iable mfg costs $530 Combine Files Fixed cost (mfg) $300 Total manufacturing costs $830 Other costs: ED Organize Pages Sales and admin costs $107 (applies to all external sales) Delete, insert, extract and a) Calculate margin (profit) on external sales using both variable AND rotate pages absorption costing per unit (Note contribution margin applies if variable cost is used and profit is used if absorption costing is used) Try now Margin/Profit on external sales: At VC (GTPR) $703.00 At Absorption cost (Cost plus) $403.00 Compress PDF Using the general transfer pricing rule (GTPR) complete the following: b) If the external demand was 27,000 units and the internal division Redact required 17,750 units, what would be the total transfer price (and calculate average price per unit) to the internal division. ANSWER: As there is insufficient capacity to supply both internal Convert, edit and e-sign PDF and external needs, there would be opportunity cost charged on forms & agreements the 1,000 units for which the supplying division missed out on external sales by supplying internally. ivate Windows The cost would be 17,750 x $530 (Variable cost) PLUS 1,000 x $703 (opportunity cost of lost sales margin) = $10,110,500 with GO to Settings t Free 7-Day Trial activate an average cost of $569.61 per unit (tonne). 12:13 AM Type here to search O N W 14"C Clear ~ " ( (x 28-Sep-21Contribution margin for supplying unit: Supplies internal first Supplies external first Revenue from sales to external parties $23,785,000 $36,180,000 Revenue from internal sales $20,280,900 $8,877,500 Total revenue - Supplying division $44,065,900 $45,057,500 Less: Variable manufacturing costs $23,187,500 $23,187,500 Less: Sales and admin costs ( External only) $1,902,800 $2,894,400 Total variable costs $25,090,300 $26,081,900 Total contribution margin $18,975,600 $18,975,600 Answer to d): Note that fixed costs remain the same regardless of units produced therefore the GTPR Ignores ALL Fixed costs and the supplying division is FULLY compensated for the lost sales so is indifferent to supplying internally or externally however the company as a whole has a much better perspective of total costs and margins while maintaining autonomy between department managersSee calculation below: Demonstration of two scenarios (with and without spare capacity) GTPR WITHOUT SPARE CAPACITY Total capacity 43,750 Units sold externally 27,000 Units required internally 17,750 Limited quantity to external customers (Capacity constraint) 26,000 Limited quantity to internal customers Units transferred with opp cost 1,000 Additional cost (VC) per unit $530 Total additional cost of production $9,407,500 Opportunity cost per unit (note that Selling costs deducted) $703 Opportunity cost on (1000) units $703,000 Total transfer cost per period $10,110,500 Average Transfer price per unit $569.61 c) Using the quantities shown in question d), calculate the TOTAL contribution margin for the supplying division under both of the following circumstances: a. Calculate the total contribution margin if the company limited supply to the suppliers (normal operations) so it could supply all of the internal division's requirements first. b. The supplying division decided to LIMIT supply to the buying division so it could supply all of its external customer's demand first (i.e. only surplus quantity would be supplied so NO additional opportunity cost would be charged d) What can be determined from the results of your answers to both parts of question c)