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John Moffat.
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mmensah
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Hi Sir.
I saw this example in my book and wondered if you could help?
D LTD uses cost based transfer pricing. Du division has cost of 300 per a unit. Da has divisional cost of 250. What will DA’s total cost per unit be if there is a mark up of 60%?
How do I know who is selling to who? the only different thing mention is one has divisional cost, the other has cost?
John Moffat
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It makes no difference whatsoever as far as the total profit for the company is concerned. The total cost per unit is 300 + 250 = 550.
See my answer to your other question, and do watch the free lectures on this.
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