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In the Gold Blue Company, Division A has a product that can be sold either to outside customers or to Division B. Information about these divisions is given below: Case 1 Case 2 Division A: Capacity in units Number of units sold externally Market selling price Variable costs per unit Fixed costs per unit based on capacity 100,000 100,000 100,000 60,000 P75 P90 73 58 10 10 Division B: Number of units needed for production Purchase price per unit from external supplier 40,000 40,000 P86 P74

In the Gold Blue Company, Division A has a product that can be sold either to outside customers or to Division B. Information about these divisions is given below: Case 1 Case 2 Division A: Capacity in units Number of units sold externally Market selling price Variable costs per unit Fixed costs per unit based on capacity 100,000 100,000 100,000 60,000 P75 P90 73 58 10 10 Division B: Number of units needed for production Purchase price per unit from external supplier 40,000 40,000 P86 P74

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The company uses the opportunity cost approach to transfer pricing. What is the minimum transfer price in Case 1?

 

In the Gold Blue Company, Division A has a product that can be sold either to outside customers or to Division B. Information about these divisions is given below: Case 1 Case 2 Division A: Capacity in units Number of units sold externally Market selling price Variable costs per unit Fixed costs per unit based on capacity 100,000 100,000 100,000 60,000 P75 P90 73 58 10 10 Division B: Number of units needed for production Purchase price per unit from external supplier 40,000 40,000 P74 P86
Transcribed Image Text:In the Gold Blue Company, Division A has a product that can be sold either to outside customers or to Division B. Information about these divisions is given below: Case 1 Case 2 Division A: Capacity in units Number of units sold externally Market selling price Variable costs per unit Fixed costs per unit based on capacity 100,000 100,000 100,000 60,000 P75 P90 73 58 10 10 Division B: Number of units needed for production Purchase price per unit from external supplier 40,000 40,000 P74 P86
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