19 - 22-26(5 min.) Transfer-pricing problem (continuation...

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Unformatted text preview: 22-26(5 min.) Transfer-pricing problem (continuation of 22-25).The company as a whole would benefit in this situation if C purchased from outside suppliers. The $15,000 disadvantage to the company as a whole by purchasing from the outside supplier would be more than offset by the $30,000 contribution margin of A's sale of 1,000 units to other customers.Purchase costs from outside supplier, 1,000 units $135$135,000Deduct variable cost savings, 1,000 units $120120,000Net cost to company as a whole by buying units from outside$ 15,000A's sales to other customers, 1,000 units $155$155,000Deduct: Variable manufacturing costs, $120 1,000 units $120,000Variable marketing costs, $5 1,000 units5,000Total variable costs125,000Contribution margin from selling units to other customers$ 30,00022-27(2030 min.) Pertinent transfer price.This problem explores the "general transfer-pricing guideline" discussed in the chapter....
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This note was uploaded on 02/05/2012 for the course ACCOUNTING acct 504 taught by Professor Dehmal during the Spring '10 term at DeVry Pittsburgh.

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19 - 22-26(5 min.) Transfer-pricing problem (continuation...

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