Minimum Transfer Price
Not what you're looking for?
A company established a branch to sell automobile seat covers. The company purchases these covers and stores them in a warehouse. The covers are then shipped from the warehouse to both the home office and the new branch FOB destination. Home office management is responsible for setting the transfer price of the covers charged to the branch in a manner that will measure the long-run incremental cost of supplying the covers.
Per unit costs of the covers are:
$60.00 purchase price.
2.50 shipping cost to warehouse.
3.00 handling cost, including $1 allocated administrative overhead.
3.50 shipping cost to branch paid by home office.
The minimum transfer price that home office should charge the branch to meet its measurement objective is:
$62.50.
$63.50.
$66.00.
$68.00.
$70.00.
Purchase this Solution
Solution Summary
The solution explains how to determine the minimum transfer price to be charged.
Solution Preview
The minimum transfer price is the incremental cost which ...
Purchase this Solution
Free BrainMass Quizzes
Business Processes
This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.
Six Sigma for Process Improvement
A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.
Organizational Leadership Quiz
This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.