Transfer Pricing StrategyDivision Details:Division E (Manufacturing):Variable Costs: $600,000Fixed Costs: $350,000Production Capacity: 50,000 unitsDivision F (Sales):Variable...
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Accounting
Transfer Pricing Strategy
Division Details:
- Division E (Manufacturing):
- Variable Costs: $600,000
- Fixed Costs: $350,000
- Production Capacity: 50,000 units
- Division F (Sales):
- Variable Costs: $500,000
- Fixed Costs: $250,000
- Demand: 40,000 units
Requirements:
- Determine the transfer price per unit for Division F to acquire products from Division E using the negotiated price method.
- Evaluate the impact on the overall profitability of the company.
- Present the transfer pricing calculations in a table.
- Discuss the benefits and challenges of the chosen transfer pricing method.
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