Figure 1
Universe Industries has two divisions: the Haley Division and the Comet Division. Information about a component that the Haley Division produces is as follows:
The Haley Division can produce up to 5,000 components per year. The Comet Division needs 200 units of the component for a product it manufactures.
-Refer to Figure 1 above. The maximum transfer price that the Comet Division would be willing to pay is

Question

Quizplus · Accepted Answer

The maximum transfer price that the Comet Division would be willing to pay is the price at which it can purchase the component externally, assuming that price is equal to or less than the benefit the Comet Division receives from using the component. Without specific external market prices or cost savings provided in the question, the maximum transfer price is not directly stated. However, in typical scenarios, the maximum transfer price is up to the external market price or the cost savings the purchasing division would incur by not having to procure the component externally. Since no specific numbers are provided in the question, this answer is based on standard transfer pricing principles.

Figure 1 Universe Industries Has Two Divisions: the Haley Division and the and the Comet