The X Division of XYZ Ltd produces wooden components that it both sells to external customers and transfers to other divisions within its own group of companies. The production involves the preparation of timber, cutting the timber into shapes and the assembly of the shapes into components. The total component cost for component A has been estimated as $41.21 per unit. Selling prices to external customers have been set by adding a mark-up of 35% to total estimated component cost. If a dual rate transfer pricing will be used, what will be the transfer price for the selling division and the buying division?
The X Division of XYZ Ltd produces wooden components that it both sells to external customers and transfers to other divisions within its own group of companies. The production involves the preparation of timber, cutting the timber into shapes and the assembly of the shapes into components. The total component cost for component A has been estimated as $41.21 per unit. Selling prices to external customers have been set by adding a mark-up of 35% to total estimated component cost. If a dual rate transfer pricing will be used, what will be the transfer price for the selling division and the buying division?
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter11: Performance Evaluation And Decentralization
Section: Chapter Questions
Problem 16BEA
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The X Division of XYZ Ltd produces wooden components that it both sells to external customers and transfers to other divisions within its own group of companies. The production involves the preparation of timber, cutting the timber into shapes and the assembly of the shapes into components.
The total component cost for component A has been estimated as $41.21 per unit. Selling prices to external customers have been set by adding a mark-up of 35% to total estimated component cost. If a dual rate transfer pricing will be used, what will be the transfer price for the selling division and the buying division?
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