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Dear Sir,
i have 1 query. in example 4 of transfer pricing the answer is “the transfer price range shall be 20-22.” (20 and 22 is included)
So, if manager decides the Trf. price $22 then B will accept it.
My question is why Div B will accept that since Div B has $8 Ad. Cost and it will sum up the $30 (22+8) cost of Div. B and they have selling price $30.
So, if cost is 30 and selling price is 30 then there will be no profit for Div. B hence $22 T.P will not be acceptable.
Similarly with Div. A if T.P is $20 decided then cost and T.P are equal and there will be no profit to A.
I think the transfer price shall be more than $20 and Less than $22.
Kindly correct me if i am wrong.
Have you watched the free lectures (there is no point in using the notes without the lectures because it is in the lectures that I expand and explain the lecture notes)?
In the lectures I do say that it should be more than, and less than. However we tend to just write it as 20 – 22 (on the basis that if it is 20 or 22, the relevant managers will be indifferent as to whether to go ahead or not).
Ohhhh Yes, Sorry Sir, I wasn’t attentive to lecutre. Sorry for wasting your time.
I do watch the lectures with o/t notes as i do selfy study and dependent solely on O/T.
Actually, only few days are left for exams and i havent started the revision yet, so just to finish the course i was going fasttt.
Sir, Can you suggest from the F5 syllabus which theory should i give more importance.
Thank you for the good work you are doing. God Bless you. 🙂
I am afraid that the exam is likely to cover the entire syllabus (especially because of Section A) and it is therefore vital that you study everything.
It is too risky to try and guess which is more likely to be asked in any particular exam.
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