Division A transfers 100,000 units of a component to Division B each year. The market price...

 

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Division A transfers 100,000 units of a component to Division B each year. The market price of the component is £25 per unit. Division A's variable cost is £15 per unit. Division A's fixed costs are £500,000 each year. What price per unit would be credited to Division A for each component that it transfers to Division B under marginal cost pricing and under two-part tariff pricing (where the Divisions have agreed that the fixed fee will be £200,000)? Marginal cost pricing Two-part tariff pricing A £15 £15 в £25 £15 £15 £17 D £25 £17 Division A transfers 100,000 units of a component to Division B each year. The market price of the component is £25 per unit. Division A's variable cost is £15 per unit. Division A's fixed costs are £500,000 each year. What price per unit would be credited to Division A for each component that it transfers to Division B under marginal cost pricing and under two-part tariff pricing (where the Divisions have agreed that the fixed fee will be £200,000)? Marginal cost pricing Two-part tariff pricing A £15 £15 в £25 £15 £15 £17 D £25 £17

Answer rating: 100% (QA)

The loss of contribution profits in Division A from lost internal ... View the full answer