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Question 2: (14 marks) In each case below, assume Nippon Co has a product that can be sold either to outside customers or to Mitchi Co which is a related entity with Nippon Co for the use in its production process. The managers of each company are evaluated based on their companys profit. Nippon Co CASE 1 CASE 2 CASE 3 CASE 4 Capacity 150,000 1500,000 150,000 150,000 Sales 150,000 110,000 130,000 90,000 Sales price $78 $78 $78 $78 Variety cost/unit $50 $50 $50 $50 Mitchi Co Volume 40,000 40,000 40,000 40,000 Market Price $76 $76 $76 $76 Required: a) Refer to the data in CASE 1 above. If the managers are free to negotiate and make decisions on their own, will the transfer take place? If so, within what range will be the Transfer Price fall? Explain your answer. (3 marks) b) Refer to the data in CASE 2 above. In this case, there will be no reduction in variable selling costs on intracompany sales. If the managers are free to negotiate and make decision on their own, will the transfer price take place? If so, within what range will the Transfer Price fall? Explain your answer. (3 marks) c) Refer to the data in CASE 3 above. If the managers are free to negotiate and make decisions on their own, will the transfer take place? If so, within what range will be the Transfer Price fall? Explain your answer. (4 marks) d) Refer to the data in CASE 4 above. If the managers are free to negotiate and make decisions on their own, will the transfer take place? If so, within what range will be the Transfer Price fall? Explain your answer. (4 marks)

Question 2 a -Type your answer here Cut and paste workings from your spreadsheet here: [Example] 5 6 7 ______ SUM 18 _______

Question 2 b -Type your answer here Cut and paste workings from your spreadsheet here: [Example] 5 6 7 ______ SUM 18 _______ Question 2 c -Type your answer here Cut and paste workings from your spreadsheet here: [Example] 5 6 7 ______ SUM 18 _______ Question 2 d -Type your answer here Cut and paste workings from your spreadsheet here: [Example] 5 6 7 ______ SUM 18 _______

9:47 f TLAW606 Intern... ra Question 2: (14 marks) In each case below, assume Nypon Coles a product that can be sold either to wide Cubora Mischi Co which is a related cantity with Nippon Co for the war in i prodati process. The managers of each company are evaluated based on their compty's profit Nippen CASE 1 CASE CASE 3 CASE City 150000 1.500.000 150.000 190.000 Sys 1500 mo 130 mm 11 $75 ST 578 Varity $50 S50 SSO 530 Mitchie Volumes an an 40.00 un ST6 Laminat a) Refers the data in CASE 1 bowe. If the managen we free lo nepotten make decision their war, will the transfer take place? If so, within the range will be the Transfer frue fair talaingar , ) Refer to the data in CASE 2 above. In this case, there will be a reductie invariable selling costs on intracompany sales of the managers are free to give and make de ce crows, will the trimit price take place? I wili halige will the Transfer Price fal Explain your arms Refer to the data in CASE 3 above. If the agers are free to dogtise and make decisions on their own, will the timberlake place? If so, walintakrange will be the Transfer Price for Explain your answer (mk) Refer to the desin CASE 4 howe. If the managers are free to negative and make decisions on their ear, will the rift take place! If so, within what range will be the Transfer Price for plain your wer (4 Questi 2-Type your newer here Cut and paste workings from your spreadsheet here Example) SUM 18 Question 2 b-Type your answer here Cut and paste workings from your spreadsheet here: [Example) 7 SUM Question e-Type your answer here Cut and paste workings from your spreadsheet here: (Example) 5 6 7 SUM 18 Question 2 - Type your answer here Cut and paste workings from your spreadsheet here: (Example) 5 6 7 SUM