Grand's Auto Northern Division is currently purchasing a part from an outside supplier. The company's Southern Division,
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Question:
Grand's Auto Northern Division is currently purchasing a part from an outside supplier. The company's Southern Division, which has excess capacity, makes and sells this part for external customers at a variable cost of $19 and a selling price of $31. If Southern begins sales to Northern, it (1) will use the general transfer-pricing rule and (2) will be able to reduce variable cost on internal transfers by $3. On the basis of this information, Southern would establish a transfer price of:
A. $19.
B. $28.
C. $16.
D. $31.
E. None of the answers is correct.
B. $28.
C. $16.
D. $31.
E. None of the answers is correct.
Related Book For
Cost Management Measuring Monitoring and Motivating Performance
ISBN: 978-0470769423
2nd edition
Authors: Leslie G. Eldenburg, Susan K. Wolcott
Posted Date: