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one of the disadvantage of using external selling price as TP is being DISINCENTIVE to using up spare capacity. Using a price based on marginal cost will encourage the use of spare capacity to at least make a marginal contribution to profit.
Is anyone please explain why disincentive?
Hi Daisy
here it is example, you and me belong to somewhere, you can maximum produce A with 3000 units meanwhile the market only demand for 2,000 so you has spare 1,000. Now, i have 2 choices to buy A is buy external and from you. so if i buy from outside you can see what it is…peace
Hi Daisy
here it is example, you and me belong to somewhere, you can maximum produce A with 3000 units meanwhile the market only demand for 2,000 so you has spare 1,000. Now, i have 2 choices to buy A is buy external and from you. so if i buy from outside you can see what it is…peace
Hi Daisy
here it is example, you and me belong to somewhere, you can maximum produce A with 3000 units meanwhile the market only demand for 2,000 so you has spare 1,000. Now, i have 2 choices to buy A is buy external and from you. so if i buy from outside you can see what it is…peace
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