Pharoah Industries is a decentralized firm. It has two production centres: Vancouver and Kamloops. Each one is evaluated based on its return on investment. Vancouver has the capacity to manufacture 160,000 units of component TR222. Vancouver's variable costs are $156 per unit. Kamloops uses component TR222 in one of its products. Kamloops adds $96 of variable costs to the component and sells the final product for $460. Consider the following independent situations: Vancouver can sell all 160,000 units of TR222 on the open market at a price of $255 per unit. Kamloops is willing to buy 16,000 of those units. What should the transfer price be? Transfer price $ per unit

Pharoah Industries is a decentralized firm. It has two production centres: Vancouver and Kamloops. Each one is evaluated based on its return on investment. Vancouver has the capacity to manufacture 160,000 units of component TR222. Vancouver's variable costs are $156 per unit. Kamloops uses component TR222 in one of its products. Kamloops adds $96 of variable costs to the component and sells the final product for $460. Consider the following independent situations: Vancouver can sell all 160,000 units of TR222 on the open market at a price of $255 per unit. Kamloops is willing to buy 16,000 of those units. What should the transfer price be? Transfer price $ per unit

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 3CMA: Aril Industries is a multiproduct company that currently manufactures 30,000 units of Part 730 each...

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