Class Notes (834,976)
United States (324,008)
BUS 202 (26)
Nick Ross (26)
Lecture 31

# BUS 202 Lecture 31: Transfer Pricing Problems Premium

4 Pages
66 Views

Department
Course
BUS 202
Professor
Nick Ross
Semester
Spring

Description
Transfer Pricing Problems Wednesday, May 3, 2017 9:41 AM • Sako: ○ Selling price per unit on the intermediate market § \$60 ○ Variable cost (per unit): § \$42 ○ Fixed costs per unit based on capacity: § \$8 ○ Capacity in units § 25,000 ○ High-Fi Division needs: § 5,000 speakers per year § Quote: □ \$57 per speaker ○ Part 1: § Assume: □ Audio division sells 20,000 to outside units (5,000 left over) § Audio division: □ Lowest acceptable transfer price? ® \$42 § Hi-Fi Division: □ Highest acceptable transfer price? \$57 ® § Would they negotiate? □ Yes, they have 5,000 that they can still produce and they will pay more than variable and less than the quote ® \$42 <= TP <= \$57 § Should the transfer take place? □ Yes, they will be able to meet in the middle ○ Part 2: § The audio division is selling all of its speaker (25,000) □ Lowest from AUDIO DIVISION: ® \$60 □ Highest from H-iFI: ® \$57 □ If left to negotiate they will not trade because there is no number that will fit that range Transfer Pricing Problems Wednesday, May 3, 2017 9:41 AM • Sako: ○ Selling price per unit on the intermediate market § \$60 ○ Variable cost (per unit): § \$42 ○ Fixed costs per unit based on capacity: § \$8 ○ Capacity in units § 25,000 ○ High-Fi Division needs: § 5,000 speakers per year § Quote: □ \$57 per speaker ○ Part 1: § Assume: □ Audio division sells 20,000 to outside units (5,000 left over) § Audio division: □ Lowest acceptable transfer price? ® \$42 § Hi-Fi Division: □ Highest acceptable transfer price? \$57
More Less

Related notes for BUS 202
Me

OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Join to view

OR

By registering, I agree to the Terms and Privacy Policies
Just a few more details

So we can recommend you notes for your school.