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Transfer Price-Kaplan ch13- q16

This topic has 2 replies, 2 voices, and was last updated 12 years ago by noorakamal.

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November 11, 2012 at 9:18 am #55186
noorakamal
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Chapter 13 from kaplan book, question 16:
can anyone please explain part b?? why optimal transfer price is $50 ($95-$45)?
as per my understanding optimal transfer price = MC+ Opprtunity cost of lost contribution, so for 200,000 untits where spare capacity exist, transfer price should= MC=60? and for remaining 100,000 untits where no capacity = 60+(105-60)=105?
dont know what i’m missing about transfer price?
November 12, 2012 at 4:40 am #106985
ddnguyen
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Hi man,
you should check the transfer price you are asking is in limited or unlimited condition, because iam practise BPP so it hard to guide detailed
Limited : TP= MC + sales foregone
Unlimited : TP = MC only
peace
November 12, 2012 at 2:51 pm #106986
noorakamal
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ya i know this rule but according to the above mentioned question, the division had spare capacity of 200,000 units and total capacity is 800,000 and currently have market for 600,000 units.
can any 1 is using kaplan book help?
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