Tfr solution.pdf

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Department
Commerce
Course
COMM 294
Professor
Peter Legzdins
Semester
Winter

Description
Transfer PricingGeneral Rule exampleCLASSPROBLEM1Illinois Metals Corporation has two divisions The Fabrication Division transfers partially completed components to the Assembly Division at a predetermined transfer Price The Fabrication Divisions Standard variable production cost per unit is 300 The division has no excess capacity and could sell all of its components to outside buyers at 380 per unit in a perfectly competitive marketWhat is the transfer price using the general rule How would the transfer price change if the Fabrication Division had excess capacityAssume now that the full cost of production for th
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