COST ACCOUNTING
TRANSFER PRICING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Division X of CORN Company is currently operating at 80% capacity. IT produces a single product and sells all its production to outside customers for P 100 per unit. Variable costs are P 30 per unit and fixed costs is P 10 per unit at the current production level. Division Y, which currently buys the same product from an outside supplier for P 70 each would like to buy the product from Division X. What is the minimum transfer price that Division Y is willing to pay for the product if it will be purchased internally?
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P 10
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P 30
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P 70
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P 100
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Explanation:
There is 1 question to complete.