Transfer pricing

This topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.

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September 5, 2017 at 1:42 pm #405633
bayu
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The following are results for a division ;
Revenue 920
cost of sales 330
Gross profit 590

Other costs:
Attributable to divisional activities (70)
Attributable to the division (30)
Apportion head office costs (40)

Divisional profit 450

In a system of responsiblty accounting,for what amount of divisional profit should the divisional manager be held responsible??
A.590 B.520 C.490 D.450
Answer given is B…i know choices A&D are totally wrong.But what is wrong with C??isnt the divisional manager accountable for costs attributable to his division(30)??
September 5, 2017 at 3:35 pm #405665
John Moffat
Keymaster
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If you are sure that you have typed out the question correctly, then indeed the answer should be C (and not B) 🙂

(I don’t know why you have headed up the post ‘transfer pricing’, because it is nothing to do with transfer pricing 🙂 )
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