Solution-How to demonstrate a transfer price using the

How to demonstrate a transfer price using the general rule

Assignment Help Managerial Accounting

Reference no: EM132558936

Spark Ltd has two divisions, assembly and electrical. The assembly division transfers partially completed components to the electrical division at a predetermined transfer price. The assembly division's standard variable production cost per unit is $550. This division has spare capacity, and it could sell all its components to outside buyers at $680 per unit in a perfectly competitive market

Required:

Question a) Determine a transfer price using the general rule.

Question b) How would the transfer price change if the assembly division had no spare capacity?

Question c) What transfer price would you recommend if there was no outside market for the transferred component and the assembly division had spare capacity?

Question d) Explain how negotiation between the supplying and buying units may be used to set transfer prices. How does this relate to the general transfer pricing rule?

Reference no: EM132558936

Questions Cloud

Correct the errors without reversing the incorrect entry : A payment on account of $820 to a creditor was debited to Accounts Payable $280 and credited to Cash $280. Correct errors without reversing the incorrect entry

Definition of user access control : In your own words provide a brief definition of user access control (UAC). Does it do any good or complicate thiings?

New offerings from broad reach sailing : Create some ideas for new offerings from Broad Reach Sailing. Decide if it makes sense to take on new partners

Physical threat to information systems : What do you think is the single greatest physical threat to information systems? Fire? Hurricanes? Sabotage? Terrorism?

How to demonstrate a transfer price using the general rule : Demonstrate What transfer price would you recommend if there was no outside market for the transferred component?

Bringing certain kinds of devices : Some organizations prohibit workers from bringing certain kinds of devices into the workplace, such as cameras, cell phones, and USB drives.

Identify the favorable and unfavorable spending variances : Identify the favorable and unfavorable spending and revenue variances.Arry's Lawn Service provides lawn care in a planned community

Explain to your roommate the meaning of debit and credit : Your roommate, a marketing major, thinks that debit means decrease and credit means increase. Explain to your roommate the meaning of debit and credit

Live memory images and images of various forms off media : Go online and research some tools that would be valuable in collecting both live memory images and images of various forms off media.

User Account

All Pages

How to demonstrate a transfer price using the general rule

Reference no: EM132558936

Reference no: EM132558936

Questions Cloud

Reviews

Write a Review

Managerial Accounting Questions & Answers

Manage budgets and financial plans

Prepare a retained earnings statement

Prepare a master budget for the three-month period

Construct the companys direct labor budget

Evaluate the predetermined overhead rate

Determine the company''s bid

Compute the pool rates for the different activities

Prepare Company financial statements

Prepare an analysis of terracycles

Discuss the ethical issues

Political resources in emerging markets

Management accounting - ehsan electronics company

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT