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The company produces another product J (in division J) for which modules (M) are used. Modules are produced by division M. Currently (assigned) profit of
The company produces another product J (in division J) for which modules (M) are used. Modules are produced by division M. Currently (assigned) profit of division M exceeds (assigned) profit of division J by 50% by the current transfer price v' [ per unit M]. Controlling department provides following information (based on one produced unit (M or J) in both divisions). Division M Division J Direct costs (Div. M.) 48 Common costs (Div. M.) 32 Profit 20 222 Direct costs (Div. J.) Common costs (Div. J.) Cost of modules 240 120 300 d) Please calculate the following elements of dual pricing system. 1. transfer price [ per module M] paid by division J 2. sales price of product J [E per unit J] 3. loss ([] as profit I) reported by corporate centre. P(M) > P(J) = P(M) = (7) (150) M) 11 P(Y) 1-S
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