AC$436$

Transfer Pricing Assignment

Name

EXERCISE $11$A$-1$ Transfer Pricing Basics $[$LO$6]$

Collyer Products Inc. has a Valve Division that manufactures and sells a standard valve as follows:

Capeaty in unts

Seling price to outside customers on the intermediate market

$100,000$

Varieble coots per unit

Fred costs per unit $($based on capacity$).$

The company has a Pump Division that could use this valve in the manufacture of one of its pumps. The Pump

Division is currently purchasing $10,000$ valves per year from an

Required: the two divisions?

$4.$ Assume the Pump Division needs $20,000$ special high$-$pressure valves per year. The Valve Division's variable costs to manufacture and ship the special valve would be $$10$ perial valves, the Valve Division would have to reduce the Valve Division is concerned, what is the lowest units per year to $70,000$ units per year. As far as the Valve acceptable transfer price?