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John Moffat.
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Shi2004
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Hello sir for mcq num5 im unable to understand the answer.
The answer is :The min transfer price is the variable cost of X 270$ plus the lost contribution from not making product Y 480$.
The lost contribution is from 1.5units of product Y. Where did it get the 1.5units of product Y??
John Moffat
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Product Y uses 80/20 = 4 hours of labour.
Product X uses 120/20 = 6 hours of labour.
Therefore making 1 unit of X is taking 6 hours of labour which could have been used to make 6/4 (= 1.5) units of Y.
Shi2004
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