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Determine an appropriate transfer price for division A

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Question - Pointe Claire Inc. operates as a decentralized multidivisional electronics company. It has two divisions. Division A transfers partially completed components to division B at a predetermined transfer price. Division A's standard variable production cost per unit is $400. Division A is operating at full capacity and it could sell all of its components to outside buyers at $520 per unit.

Instructions -

a. Determine an appropriate transfer price for division A.

b. How would the transfer price change if division A had excess capacity?

Reference no: EM132534542

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