Lamothe Solutions is a management consulting firm. Its Business Division advises firms on the adoption and Civic Division consults with state and local governments. Civic Division has a client that is interested in imple system in its public works department. The division's head approached the head of Business Division about associates. Corporate Division charges clients $780 per hour for associate services, the same rate other com The Civic Division head complained that it could hire its own associate at an estimated variable cost of $380 Business pays its associates. Suppose that Civic Division will charge the client interested in implementing a costing system by the hour bas fee, where the cost is primarily the consultant's hourly pay. Assume also that Civic Division cannot hire additic it is to do this job, it will need to use a consultant from Business Division. Required: a-1. What is the minimum transfer price that Business Division should obtain for its services, assuming that it is a-2. Would this be an ethical price to charge the government client? b-1. What is the transfer price you would recommend if Corporate Division was not operating at capacitu?

Lamothe Solutions is a management consulting firm. Its Business Division advises firms on the adoption and Civic Division consults with state and local governments. Civic Division has a client that is interested in imple system in its public works department. The division's head approached the head of Business Division about associates. Corporate Division charges clients $780 per hour for associate services, the same rate other com The Civic Division head complained that it could hire its own associate at an estimated variable cost of $380 Business pays its associates. Suppose that Civic Division will charge the client interested in implementing a costing system by the hour bas fee, where the cost is primarily the consultant's hourly pay. Assume also that Civic Division cannot hire additic it is to do this job, it will need to use a consultant from Business Division. Required: a-1. What is the minimum transfer price that Business Division should obtain for its services, assuming that it is a-2. Would this be an ethical price to charge the government client? b-1. What is the transfer price you would recommend if Corporate Division was not operating at capacitu?

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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