• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

Congratulations to Jamil from Pakistan and Jeeva from Malaysia - Global Prize winners!
see all ACCA December 2022 Genius Hunt Competition winners >>

Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>

Minimum Transfer price

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Minimum Transfer price

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • June 1, 2021 at 10:40 pm #622706
    edwin1294
    Member
    • Topics: 6
    • Replies: 7
    • ☆

    Hi John, this question is from Mock exam 3 from the BPP kit – question No 5 on transfer pricing. How and why is the answer $750. I know the Minimum TP when in full capacity should be opportunity cost plus variable cost. I didn’t understand the part where Y takes 4 hours and X takes 6 hours. Please can you explain. Thanks very much

    June 2, 2021 at 8:12 am #622730
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51551
    • ☆☆☆☆☆

    At the moment B is making product Y. Each unit of Y takes 4 hours and therefore they are currently earning a contribution of (600 – 200 – 80) / 4 = $80 per hour.

    If they make product X the they will have the marginal cost of 150 + 120 = 270 per unit. Each unit of product X takes 6 hours and every hour used is taking hours away from production of Y and therefore thy lose contribution of 6 hours x $80 per hour = 480

    So the minimum transfer price is 270 + 480 = $750.

    This is very similar to the last example that I work through in my free lectures on transfer pricing.

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

ACCA News:

 

ACCA My Exam Performance for non-variant Applied Skills exams is available NOW

NEW! Download the ACCA Pass Guide

FREE Verifiable CPD for ACCA Members

ACCA mock exams and debrief videos

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

Donate

If you have benefited from OpenTuition please donate.

ACCA CBE 2023 Exams

Instant Poll * How was your exam, and what was the result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • John Moffat on Revaluation Reserve – ACCA Financial Accounting (FA) lectures
  • John Moffat on Revaluation Reserve – ACCA Financial Accounting (FA) lectures
  • CHICCO.J on ACCA AB Chapter 1 – The nature and structure of organisations – Questions
  • Joanne94 on Irrecoverable Debts and Allowances Example 3 – ACCA Financial Accounting (FA) lectures
  • Joanne94 on Irrecoverable Debts and Allowances Example 3 – ACCA Financial Accounting (FA) lectures

Copyright © 2023 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy