- This topic has 3 replies, 2 voices, and was last updated 2 years ago by .
Viewing 4 posts - 1 through 4 (of 4 total)
Viewing 4 posts - 1 through 4 (of 4 total)
- The topic ‘Mcq transfer price BPP pg 358 num 5’ is closed to new replies.
OpenTuition recommends the new interactive BPP books for December 2024 exams.
Get your discount code >>
Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Mcq transfer price BPP pg 358 num 5
Hello sir can you explain this question. How to find the lost contribution??
I assume that you are referring to the question Perrin in the Revision Kit?
At present they are using all their labour making Product Y and are generating a contribution of $320/4 = $80 per hour.
If they produce Product X for the other division then every hour used to make Product X is taking hours away from Product Y and is therefore losing them contribution $80 per hour.
Since each unit of X needs 6 hours of labour, they are losing contribution of 6 x $80 = $480 for every unit of X that they make.
This example is similar to the last of the examples that I work through in my free lectures on transfer pricing!
Thank you for your help sir!!!!
You are welcome.