Time lei Margo Limited has two (2) divisions, the Makeba and the Kubang Division. Currently the...

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Time lei Margo Limited has two (2) divisions, the Makeba and the Kubang Division. Currently the Makeba Division sells a p the market for $960 per unit. The Kubang Division wants to buy the part from the Makeba Division for a price yet determined. The production capacity of the Makeba Division is 24,000 units annually. The cost per unit data for the Makeba Division is as follows: Direct Materials $360 Direct Labour $420 Variable overhead $140 Fixed overhead $105 Required: Explain and calculate the transfer prices at which Makeba Division should offer to transfer the part to the Kubang Division in order that the group profit maximizing decisions may be taken on financial grounds in each of the followi independent situations: Time lei Margo Limited has two (2) divisions, the Makeba and the Kubang Division. Currently the Makeba Division sells a p the market for $960 per unit. The Kubang Division wants to buy the part from the Makeba Division for a price yet determined. The production capacity of the Makeba Division is 24,000 units annually. The cost per unit data for the Makeba Division is as follows: Direct Materials $360 Direct Labour $420 Variable overhead $140 Fixed overhead $105 Required: Explain and calculate the transfer prices at which Makeba Division should offer to transfer the part to the Kubang Division in order that the group profit maximizing decisions may be taken on financial grounds in each of the followi independent situations:

Answer rating: 100% (QA)

a Transfer price 960 per unit When there is no spare capacity the golden rule for minimum transfer p... View the full answer