What is the ideal transfer price

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Question - Division R sells one of its products to division S in the same group. The product cost consists of Rs. 250 for materials, Rs.80 for direct labour, Rs.20 for variable overhead and Rs.90 for fixed overhead. R division sets its profit margin equal to 30% of the variable cost. What is the ideal transfer price if R is operating at less than full capacity?

Reference no: EM132556024

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