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on your answer in the previous requirement, provide and justify a proper transfer price. (130 words)

on your answer in the previous requirement, provide and justify a proper transfer price. (130 words)

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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2. Based your in the previous on answer requirement, provide and justify a proper transfer price. (130 words)
Transcribed Image Text:2. Based your in the previous on answer requirement, provide and justify a proper transfer price. (130 words)
Gamma Company produces cars. Two of the profit centers, Tires center and Assembly center, were in conflict over the price of tires. External suppliers of tires offered Rania, the manager of the Assembly center, the same type and quality of tire for $200. Rania used to buy these tires internally for $300 each. Jamil the CEO of the company called for a meeting with the managers of both centers in order to solve the issue. Kamil the manager of the Tires Centre explained that: "The tires we produce have been a trusted brand for over 60 years and are distributed by Gamma Company to members all over the globe. Our tires have long been recognized as a leading private brand since 1954." Tires Center: Cost per tire 2$ Direct materials 95 Direct labor 54 Variable overheads 25
Transcribed Image Text:Gamma Company produces cars. Two of the profit centers, Tires center and Assembly center, were in conflict over the price of tires. External suppliers of tires offered Rania, the manager of the Assembly center, the same type and quality of tire for $200. Rania used to buy these tires internally for $300 each. Jamil the CEO of the company called for a meeting with the managers of both centers in order to solve the issue. Kamil the manager of the Tires Centre explained that: "The tires we produce have been a trusted brand for over 60 years and are distributed by Gamma Company to members all over the globe. Our tires have long been recognized as a leading private brand since 1954." Tires Center: Cost per tire 2$ Direct materials 95 Direct labor 54 Variable overheads 25
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