Comments

  1. avatar says

    Hi, the final example where product X’s income generated per hour was used for a question which was required to complete the minimum transfer price for Y? Could you please explain as to why the opposing products figure was used rather than the one which would have been required.

    • Profile photo of John Moffat says

      If Division B did not exist, then A would prefer to use the limited hours making product X (because X gives the biggest contribution per hour (key factor analysis)).

      B wants Y, but if A makes Y then every hour they use to make Y’s takes away hours that could have been used to make X’s and therefore loses them contribution of $4 per hour. They will only be prepared to produce Y provided it earns them at least $4 per hour.

  2. Profile photo of Chris says

    **sighhhh**

    It’s Sunday, the sun is shining and I am in studying!!! All i can say though is that these lectures are a great help and funnily enough make me want to studying more that what i was originally without using OT.

    Great jobs guys and keep it up! Top Notch!

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