Division J makes a product, R, which it sells externally into a perfectly competitive market for £57; this represents a 90% mark-up on standard variable cost. It also transfers product R to Division K. If total external demand for product R exceeds the capacity of Division J, what is the optimal transfer price between divisions for a unit of product R? A) £54.50 B) £55.50 C) £56.72 D) £57.00
Division J makes a product, R, which it sells externally into a perfectly competitive market for £57; this represents a 90% mark-up on standard variable cost. It also transfers product R to Division K. If total external demand for product R exceeds the capacity of Division J, what is the optimal transfer price between divisions for a unit of product R? A) £54.50 B) £55.50 C) £56.72 D) £57.00
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter10: Evaluating Decentralized Operations
Section: Chapter Questions
Problem 6BE
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Division J makes a product, R, which it sells externally into a
If total external demand for product R exceeds the capacity of Division J, what is the optimal transfer price between divisions for a unit of product R?
A) £54.50
B) £55.50
C) £56.72
D) £57.00
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