(PT 1) Division A has variable manufacturing costs of $65 per unit and fixed costs of...

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(PT 1) Division A has variable manufacturing costs of $65 per unit and fixed costs of...

(PT 1) Division A has variable manufacturing costs of $65 per unit and fixed costs of $14 per unit. Assuming that Division A is operating at capacity, what is the optimal transfer price of an internal transfer when the market price is $82?

(PT 2) Division A has variable manufacturing costs of $68 per unit and fixed costs of $17 per unit. Assuming that Division A is operating significantly below capacity, what is the optimal transfer price of an internal transfer when the market price is $89?

business accounting

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Answer 1

Answer #1

1. As the division is operating at capacity,

Optimal transfer price = Market price

= $82

2. As the division is operating significantly below the capacity,

Optimal transfer price = Variable Manufacturing cost

= $68

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Answer 2

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Division A has variable manufacturing costs of $53 per unit and fixed costs of $14 per...

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(PT 1) Division A has variable manufacturing costs of $65 per unit and fixed costs of...

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