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The question says that C wants a quote for 60,000 units. If they supply them with 60,000 then they can only sell the reminder of their capacity externally that is 150000-60000=90000
but the External sales is 110,000 Bits , so 110000-90000= 20,000 , wouldn’t this be the units foregone?
No answer doesnt explain this .
i can’t figure out what two transfer prices will be? are they asking minimum and maximum?accaamnaacca wrote:why have we satisfied external sales first?
oh got it. we don’t know the selling price for internal sales ,thats what we are calculating.
also some questions mentions that “group’s policy is that group
companies and divisions must always make internal sales first before selling outside
the group” what if they don’t mention anything like this?but why aren’t we comparing it with budget this year and actual this year like flex budget. wouldn’t we know about 25% fall in market share when deciding budgeted this year units?
so 500×25%=375?