A manufacturing company, PZ Ltd, has two divisions: Division P and Division Z. Both make a single standardised product. Division P makes components P1 which it supplies to both Division Z and external customers. Division Z makes product Z1 using one unit of component P1 and other materials. This product is then sold to external customers. It has always been the practice that Division Z buys component P1 from Division P. The following information is available:

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The following information is available: Selling price Direct materials: Component L Other Direct labour Variable overheads Selling & distribution costs Component P1 70 Product Z1 168 70 21 130 10.5 3.5 2559 29.75 15.75 5.25 7 1.75 The following information is available: Selling price Direct materials: Component L Other Direct labour Variable overheads Selling & distribution costs Component P1 70 Product Z1 168 70 21 130 10.5 3.5 2559 29.75 15.75 5.25 7 1.75

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Analysis of Transfer Pricing Options for PZ Ltd 1 Costplus pricing Transfer price Cost of component ... View the full answer