Forums › ACCA Forums › ACCA PM Performance Management Forums › transfer pricing materical cost
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- April 6, 2015 at 8:39 am #240264
Dear sir ,
could you explain material calculation dec 2011 question 2 bath co questionDivision A
Current selling price for each bath $450
Costs per bath:
Fittings from Division B $75
Other materials from external suppliers $200
Annual production and sales of baths (units) 80,000
Maximum annual market demand for baths (units) 80,000Division B
Current external selling price per set of fittings $80
Current price for sales to Division A $75
Costs per set of fittings:
Materials $5
Maximum annual production and sales of sets of fittings (units) 200,000
(including internal and external sales)
Maximum annual external demand for sets of fittings (units) 180,000
Maximum annual internal demand for sets of fittings (units) 80,000, although the new manager of Division A believes that he could obtain fittings of the same
quality and appearance for $65 per set,division A buy 60000 externally and 20000 from Div B
what price to take w3 and what is the internalsales w2
other maternal from external supplier $200 is it means buying cost from outside?W(2) Internal sales/inter-divisional transfers
20,000 x $65 = $1,300
W(3) Material costs
Div A: 60,000 x $265 + (20,000 x $200) = $19,900thanks in advance
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