Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Q. What is Minimum pricing?
The minimum transfer price an internal seller would accept will depend on whether it has spare capacity to utilise or not.
If spare capacity exists the relevant cost and therefore minimum price to a seller would be the variable (marginal) cost of production e.g. extra cost of making and selling one more unit. Variable (marginal) cost would be the only cost considered by a seller because fixed overhead is normally unavoidable and would not change if supply did or did not take place. The variable (marginal) cost represents the absolute bare minimum transfer price to a seller, in circumstances of spare capacity, at this price, the seller would be indifferent but not out of pocket. Marginal costing may also be appropriate when no intermediate market exists for the seller e.g. Seller can only sell to an internal customer and no external customers are available.
If full capacity exists, the seller would have to turn away external customers and business will be lost if further internal supply were to take place. Because of this dilemma the seller would normally want a minimum price at least equal to the external market price it would normally charge when selling to external customers, this is assuming there is no difference in the cost of supplying internal or external customers e.g. differences in packaging, delivery or marketing costs, in which case the price would normally be adjusted.
The minimum transfer price for a seller at full capacity is generally the external market price, if for some reason the seller maybe discontinuing other products to supply internally, then the minimum price would be the variable (marginal) cost of production and the lost contribution from discontinuing other products for internal supply to take place e.g. the variable cost and contribution lost being the opportunity cost.
develop efe matrix for walt disney
Process design strategy define with example
what is HACCP and benefits in food industry
TFX is a multinational company which manufactures and retails branded designer clothing with business units in a number of different countries globally. Up unless now, each of the
Q. Illustration of brand orientated divisional structure? The Whitbread Group Plc, have several independent divisions or SBUs managing its popular brands of hotels, restauran
You are considering shortly opening a copier serving center near a university. Your estimate of fixed cost is at $15,000 a year and the variable cost for every copy made is $0.01.
Pioneering development of GIS
Explain Business strategy Business strategy is concerned with how an operating unit or strategic business unit approaches a certain market. This is the level where competitiv
Linking Strategic Organizational Initiatives to Purpose, Mission, and Vision Select an existing business that is entering into a new or emerging market for that company. You may
Louise Nance had working on the assembly line of the Jackson Manufacturing Company for about six months. During recent weeks, her supervisor, Ben Miller, noticed that her productio
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd