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How would the transfer price change

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Reference no: EM132831197

Electro Ltd has 2 divisions:Assembly and Electrical.

The Assembly Division transfers partially completed components to the Electrical Division at a predetermined transfer price.The assembly Division's standard variable production cost per unit is $450. This division has spare capacity, and it could sell all its components to outside buyer at $570 per unit in a perfectly

Problem 1: Determine a transfer price using the general rule.

Problem 2: how would the transfer price change if the Assembly Division had no spare capacity?

Problem 3: What transfer price would you recommend if there wasno outside market for the transferred component,and the Assembly division had spare capacity?

Reference no: EM132831197

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