Omega Division makes and sells a single product. Presently it sells 12,000 units per year to outside customers at P24 per unit. The annual capacity is 20,000 units and the variable cost to make each unit is P16. All selling expenses are fixed. Alpha Division would like to buy 10,000 units a year from Omega Division. The unit price that Omega Division should charge Alpha Division, according to the transfer pricing formula, is

Omega Division makes and sells a single product. Presently it sells 12,000 units per year to outside customers at P24 per unit. The annual capacity is 20,000 units and the variable cost to make each unit is P16. All selling expenses are fixed. Alpha Division would like to buy 10,000 units a year from Omega Division. The unit price that Omega Division should charge Alpha Division, according to the transfer pricing formula, is

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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