Chapter 13 from kaplan book, question 16:
can anyone please explain part b?? why optimal transfer price is $50 ($95-$45)?
as per my understanding optimal transfer price = MC+ Opprtunity cost of lost contribution, so for 200,000 untits where spare capacity exist, transfer price should= MC=60? and for remaining 100,000 untits where no capacity = 60+(105-60)=105?
dont know what i’m missing about transfer price?
you should check the transfer price you are asking is in limited or unlimited condition, because iam practise BPP so it hard to guide detailed
Limited : TP= MC + sales foregone
Unlimited : TP = MC only
ya i know this rule but according to the above mentioned question, the division had spare capacity of 200,000 units and total capacity is 800,000 and currently have market for 600,000 units.
can any 1 is using kaplan book help?
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