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Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello
Edition 17ISBN: 978-0078025778Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello
Edition 17ISBN: 978-0078025778 Exercise 23
Transfer Prices
Moto Corporation manufactures and sells motor bikes. The Wheel Frame Division creates parts that are both sold externally and transferred internally to the Assembly Division for assembly. Wheel #606 sells externally for $48 and the variable cost to make it is $26. What would you recommend as the transfer price between Wheels Frames and Assembly if there is a competitive external market for #606? Would your answer change if there were no external market for #606? Why? What would the transfer price be if upper management required cost plus 20 percent as the transfer price?
Moto Corporation manufactures and sells motor bikes. The Wheel Frame Division creates parts that are both sold externally and transferred internally to the Assembly Division for assembly. Wheel #606 sells externally for $48 and the variable cost to make it is $26. What would you recommend as the transfer price between Wheels Frames and Assembly if there is a competitive external market for #606? Would your answer change if there were no external market for #606? Why? What would the transfer price be if upper management required cost plus 20 percent as the transfer price?
Explanation
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Transfer price is the price at which one...
Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello
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