Office Products Inc. manufactures and sells various high-tech office automation products. Two divisions of Office Products Inc. are the Computer Chip Division and the Computer Division. The Computer Chip Division manufactures one product, a “super chip,” that can be used by both the Computer Division and other external customers. The following information is available on this month’s operations in the Computer Chip Division: Selling price per chip P50 Monthly capacity 10,000 chips Variable costs per chip P20 External sales 6,000 chips Fixed production costs P60,000 Internal sales 0 chips Fixed SG&A costs P90,000 Presently the Computer Division purchases no chips from the Computer Chips Division, but instead pays P45 to an external supplier for the 4,000 chips it needs each month. Assume that the Computer Chip Division sells 8,000 to its outside customers and Computer Division needs 4,000 units… What is the minimum Transfer price ?
Office Products Inc. manufactures and sells various high-tech office automation products. Two divisions of Office Products Inc. are the Computer Chip Division and the Computer Division. The Computer Chip Division manufactures one product, a “super chip,” that can be used by both the Computer Division and other external customers. The following information is available on this month’s operations in the Computer Chip Division:
Selling price per chip P50 Monthly capacity 10,000 chips
Variable costs per chip P20 External sales 6,000 chips
Fixed production costs P60,000 Internal sales 0 chips
Fixed SG&A costs P90,000
Presently the Computer Division purchases no chips from the Computer Chips Division, but instead pays P45 to an external supplier for the 4,000 chips it needs each month.
Assume that the Computer Chip Division sells 8,000 to its outside customers and Computer Division needs 4,000 units… What is the minimum Transfer price ?
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