Explore BrainMass

Explore BrainMass

    Milwaukee Metallurgy Corporation (MMC)

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Milwaukee Metallurgy Corporation (MMC) has two divisions. The Fabrication Division transfers partially completed components to the Assembly Division at a predetermined transfer price. /The Fabrication Division's standard variable production cost per unit is $450. The division has no excess capacity, and it could sell all of its components to outside buyers at $570 per unit in a perfectly competitive marker.

    1. Determine a transfer price for MMC using the general rule.
    2. How would the transfer price change if the Fabrication Division had excess capacity?

    © BrainMass Inc. brainmass.com June 3, 2020, 7:15 pm ad1c9bdddf

    Solution Preview

    The transfer pricing is not only an accounting tool, rather it is a behavioral tool that motivate managers to make the right decisions, In particular the transfer price should be designed so that it accomplishes the following subjects:
    1. It should provide each segment with the relevant ...

    Solution Summary

    192 words with references to determine a transfer price and explain how excess capacity in fabrication of the product would change that.