# Assume two divisions of a company, P (producing) and B (buying), that are treated as investment centres for

Assume two divisions of a company, P (producing) and B (buying), that are treated as investment centres for
performance-evaluation purposes. P division produces a product that can be used by B division. P division’s product manufacturing cost is \$100.00 per unit (including \$20 fixed manufacturing cost per unit). Division P can sell its output externally for \$120.00 per unit and incurs a sales commission charge of \$5.00 per unit. Currently, Division B can purchase the product from an external supplier at \$120.00 per unit plus a \$3.00 transportation charge per unit. Division B incurs \$20 further processing cost and sells the final product for \$190 on the external market. Division B also incurs a variable selling cost of \$10 per unit.
Required: Answer each of the following independent questions.
(i) Determine whether the transfer is profitable for the company. Assume that division P sells all products to outside customers. Show your calculations.
(ii) Determine the minimum and maximum transfer prices if division P sells all products to outside customers. Describe the likely reactions of divisional managers towards the transfer. Show your calculations.
(iii) Determine the minimum and maximum transfer prices if P division currently has sufficient spare capacity to transfer the quantity required by B division. Describe the likely reactions of divisional managers towards the transfer. Show your calculations.
(iv) Determine the minimum and maximum transfer prices if P division has enough spare capacity to transfer the units required by B division and there is no external market for its product. Describe the likely reactions of divisional managers towards the transfer. Show your calculations.
This is my past exam question and i need understand it for my final exam. Part of transfer price make me confuse. Can some one answer for this question and I’d like you to show me the intermediate expression.

## Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
\$26
The price is based on these factors:
Number of pages
Urgency
Basic features
• Free title page and bibliography
• Unlimited revisions
• Plagiarism-free guarantee
• Money-back guarantee
On-demand options
• Writer’s samples
• Part-by-part delivery
• Overnight delivery
• Copies of used sources
Paper format
• 275 words per page
• 12 pt Arial/Times New Roman
• Double line spacing
• Any citation style (APA, MLA, Chicago/Turabian, Harvard)

# Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

### Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

### Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

### Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.