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Hello Sir,
For paper J15 Ques 1, the financial acceptability part, how do we get the contribution of $120?
As per the past paper answer its:
<Contribution (parts sales) ($120 +inflation per unit)>
Thank you
They currently transfer at $200 per unit and earn a contribution of $40 per unit. Therefore the cost is $160 per unit.
In future they are increasing the transfer price to $280. So they will earn a contribution of 280 – 160 = $120 per unit.
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