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1) transfer pricing rule always priority tranfering to internal first then dealing with external? Plz make the voncept clear if am wrong
2) In dec 11 q2 part a
I solved it like 180 000 x 60
20 000 x 55But the answer was
120 000external
80 000 internalWhy ?? I did vc+ loat contribution and find 20+60=80
Min 80 max 65
So priority to sell for external which maximum demand is 180000Plz help me identifying my wrong understanding
1. No – not at all. It depends on the question.
2. In part (a) you are told to use the current system and currently head office only allows A to buy from B
In part (b) they are allowed autonomy and then B will sell 180,000 externally.In same question part b
Could u explain how we got to this soultion
Material costs
Div A 60000×265+20000×200=19900
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