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