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Hi Dear Tutor, I have a question.
Opentuition multiple choice question in transfer pricing,question number 2(Epsilon)
Division P sells to external customer
external sales(4000*396)-1584000
VPC(4000*240)-(960000)
SFC—(24000)
profit–600000If Division P sells to divison Q at 350 which other supplier offered
Sales(4000*350)————-1400000
VOC(4000*240)———-(960000)
SFC————————–(24000)
Profit————————-416000Why i do not take the difference between 60000-416000?
600000-416000=184000 profit decrease but we took 416000?I solved the question and saw it is not 184000 it is 416000
P is not selling externally – the question says they can only sell to Q.
Either Q buys from P, or Q buys externally (and P is closed).
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