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.
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Premier Co has 2 divisions North and South. north produces a component at a full cost of 28 per unit variable costs are 20 per unit including a packaging cost of 1.50 per unit. north sells the component in an external market for 30 per unit and also transfers 10000 units a year to South at transfer price equal to full cost . transferred component do not require packaging. North currently has surplus capacity in the manufacture of the component. an external supplier has offered 10000 units per year of the component to south at a price 25 per unit. what will be the decrease in premier co annual profit if south takes up the offer from the external supplier?
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is the answer 35000
I think it is not
Where is this question from?
It is better to say what question it is, where it is from?
We have to check the authenticity of the question, ie that it is PM standard.
So we need to know if it is a question from the textbook, exam kit, past exam question, ACCA hub etc ….
It would be very unprofessional of us to do it any other way
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