Sugarland, Inc., has a division in Indonesia that makes dyestuff in a variety of colors used to
Question:
The Clothing Division currently buys its dye powder from an outside supplier for $3.80 per pound. If the Clothing Division purchases the powder from the Indonesian division, the shipping costs will be $0.34 per pound, but sales commissions of $0.05 per pound will be avoided with an internal transfer.
Required:
1. Which Section 482 method should be used to calculate the allowable transfer price? Calculate the appropriate transfer price per pound.
2. Assume that the Clothing Division cannot buy this type of powder externally since it has an unusual formula that results in a color particular to Sugarland's jeans. Which Section 482 method should be used to calculate the allowable transfer price? Calculate the appropriate transfer price per pound.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Cornerstones of Cost Management
ISBN: 978-1111824402
2nd edition
Authors: Don R. Hansen, Maryanne M. Mowen
Question Posted: