I KANS??K PRICING QUIZ 3 Division A capacity Division A outside sales Case 1 Cas

Question

I KANS??K PRICING QUIZ 3 Division A capacity Division A outside sales Case 1 Case 2 Case 3 Case 4 100,000 500,000 250,000 400,000 10o,000 500,000 200.000 300,000 Division B needs 30,000 80,000 50,000 100,000 Division A: Normal variable cost Variable costs avoided S50 $10 S25 $45 $2 $12 S50 on internal sales Fixed cost per unit S8 $45 based on capacity $10 Outside selling price $100 S80 Purchase price from outside supplier $68 $96 $43 $75 Case 1 Optimal Range of Transfer Prices Case 2: Optimal Range of Transfer Prices Case 3: Optimal Range of Transfer Prices Case 4: Optimal Range of Transfer Pices

Explanation / Answer

Case 1: The transfer price is 30000x50=$1500000

Case 2 : The transfer price is (80000x(50-10)=$3200000

Case 3: The transfer price is (50000x25)=$1250000

Case 4: The tramsfer price is (100000x(45-2)=$4300000

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