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MCQ No 279 in BPP kit

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › MCQ No 279 in BPP kit

  • This topic has 2 replies, 2 voices, and was last updated 4 years ago by Shi2004.
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  • May 10, 2021 at 10:39 am #620200
    Shi2004
    Participant
    • Topics: 79
    • Replies: 33
    • ☆☆

    Pg 96 question 279. For the minimum transfer price it is the marginal cost + contribution lost right?
    For the contribution lost why is it not 16-8? The answer for minimum price is only 8$
    Please explain sir.

    May 10, 2021 at 2:51 pm #620224
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54696
    • ☆☆☆☆☆

    There is no lost contribution here because A is not working at full capacity and can meet in full the external demand and the demand from B. There would be lost contribution if selling to B would mean that they has to sell less externally.

    Have you watched my free lectures on transfer pricing, because I do work through an example of this situation? The lectures are a complete free course for Paper PM and cover everything needed to be able to pass the exam well.

    May 10, 2021 at 6:32 pm #620245
    Shi2004
    Participant
    • Topics: 79
    • Replies: 33
    • ☆☆

    Okay sir I’ll check the lectures.
    Thank you for your time sir?

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