Scottsdale Manufacturing is organized into two divisions: Fabrication and Assembly. Components transferred between the two divisions are
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1. What roles are played by transfer prices? That is, why are transfer prices needed?
2. Use the general transfer-pricing rule presented in the chapter to determine an appropriate transfer price. Why (or in what sense) is the amount you calculated considered an appropriate transfer price?
3. What if the Fabrication Division had excess capacity? How would this change the indicated transfer price? Why is the amount you determined considered an appropriate transfer price?
4. Are there any downsides of using the general transfer-pricing rule to determine the transfer price for internal transfers?
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Related Book For
Cost Management A Strategic Emphasis
ISBN: 978-0077733773
7th edition
Authors: Edward Blocher, David Stout, Paul Juras, Gary Cokins
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