Fixed assets= 5,00,000 Current assets (other than debtors) 3,00,000 Debtors =2,00,000 Annual fixed cost of the division= 8,00,000 Variable cost per unit of product 10 Budgeted volume of production per year (units)= 4,00,000 Desired return on investment 28% You are required to determine the transfer price for the division A. Falcon co fixes the inter-divisional transfer prices for its products on the basis of cost plus and estimated return on investment in its division. The details given above was related toDivision A for the year 2019-20.
Fixed assets= 5,00,000 Current assets (other than debtors) 3,00,000 Debtors =2,00,000 Annual fixed cost of the division= 8,00,000 Variable cost per unit of product 10 Budgeted volume of production per year (units)= 4,00,000 Desired return on investment 28% You are required to determine the transfer price for the division A. Falcon co fixes the inter-divisional transfer prices for its products on the basis of cost plus and estimated return on investment in its division. The details given above was related toDivision A for the year 2019-20.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Fixed assets= 5,00,000
Current assets (other than debtors) 3,00,000
Debtors =2,00,000
Annual fixed cost of the division= 8,00,000
Variable cost per unit of product 10
Budgeted volume of production per year (units)= 4,00,000
Desired return on investment 28%
You are required to determine the transfer price for the division A.
Falcon co fixes the inter-divisional transfer prices for its products on the basis of cost plus and
estimated return on investment in its division. The details given above was related toDivision A
for the year 2019-20.
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