Transfer Pricing Question – F5 exam

Thank you so much for your suggested answers.

Just one question about the transfer pricing question. I split the lost contribution of £80 for the 5000 additional units M would have to sell to S (to fulfil S demand) between the 35,000 units in order to arrive at a transfer price as I anticipated that this would help to maximise the company profits (with M receiving all lost contribution and S paying lower than £800). Do you think I would lose a lot of marks as this does not appear correct now, in line with your suggestions?

Thank you again, and for your lectures, I wouldn’t be able to study ACCA if it wasn’t for them.