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15-31. Evaluate Transfer Pricing System Page 645 LO 15-2) San Jose Company operates a Manufacturing...

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15-31. Evaluate Transfer Pricing System Page 645 LO 15-2) San Jose Company operates a Manufacturing Division and an Assembly Division. Both divisions are evaluated as profit centers. Assembly buys components from Manufacturing and assembles them for sale. Manufacturing sells many components to third parties in addition to Assembly. Selected data from the two operations follow Manufacturing Assembly Capacity (units) 400,000 200,000 Sales price $ 400 $ 1,300 Variable costs $ 160 $ 480 Fixed costs $40,000,000 $24,000,000 Required a. Current production levels in Manufacturing are 200,000 units. Assembly requests an additional 40,000 units to produce a special order. What transfer price would you recommend? Why? b. Suppose Manufacturing is operating at full capacity. What transfer price would you recommend? Why? c Suppose Manufacturing is operating at 380,000 units. What transfer price would you recommend? Why? 15-32. International Transfer Prices

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