Determine whether it would be advantageous for the company as a whole to accept the special...
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Determine whether it would be advantageous for the company as a whole to accept the special order. b. Discuss the pros and cons of the current full-cost plus market transfer-pricing policy. c. Identify three alternative transfer-pricing policies. d. Based on your analysis, provide an overall recommendation to PCCI's president. Total product costs Profit margin Internal transfer price 11.00 1.10 $12.10 25.80 2.58 $28.38 49.88 Note 1. A square of siding is approximately 100 square feet. Note 2. In the Petroleum Division, the direct labour is paid on an hourly basis and it is common practice to lay off employees when necessary. In the PVC Compound Division, the employees require significant skills and training, and thus layoffs are not implemented, even during recessionary periods. In the Siding Division, approximately one-third of the direct labour is supervisory and is maintained regardless of the level of activity in the manufacturing plants. Note 3. It is company policy to charge manufacturing overhead on the basis of direct labour dollars. Determine whether it would be advantageous for the company as a whole to accept the special order. b. Discuss the pros and cons of the current full-cost plus market transfer-pricing policy. c. Identify three alternative transfer-pricing policies. d. Based on your analysis, provide an overall recommendation to PCCI's president. Total product costs Profit margin Internal transfer price 11.00 1.10 $12.10 25.80 2.58 $28.38 49.88 Note 1. A square of siding is approximately 100 square feet. Note 2. In the Petroleum Division, the direct labour is paid on an hourly basis and it is common practice to lay off employees when necessary. In the PVC Compound Division, the employees require significant skills and training, and thus layoffs are not implemented, even during recessionary periods. In the Siding Division, approximately one-third of the direct labour is supervisory and is maintained regardless of the level of activity in the manufacturing plants. Note 3. It is company policy to charge manufacturing overhead on the basis of direct labour dollars.
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Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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