- This topic has 3 replies, 2 voices, and was last updated 6 years ago by
.
Viewing 4 posts - 1 through 4 (of 4 total)
- Posts
Dear Sir,
not to flood the lecture, i will ask again,
if there is unlimited production, and there is both external demand and from division B,
what will be the minimum transfer price? I mean will A set the minimum the marginal cost plus lost contribution or will it be only the marginal revenue?i am asking in case the examiner asks. Personally, since there is unlimited capacity i would not charge plus the lost contribution since its not actually lost.
If there is unlimited production then there is no lost contribution because they can produce whatever the external market wants and also whatever the other division wants as well.
So therefore the minimum transfer price would simply be the marginal cost.
Viewing 4 posts - 1 through 4 (of 4 total)
- The topic ‘sensible transfer pricing lecture’ is closed to new replies.