Ask Question, Ask an Expert


Ask Accounting Basics Expert

Q1) This problem is exercise in transfer pricing. It is suitable to Airtex, Kyocera, North Country Auto and Sarnia.

Go to Birch Paper case.

Based on section on Transfer Pricing in reading Introduction to Responsibility Accounting Systems, there are three primary methods for transfer pricing. They are (i) cost, (ii) market price, (iii) negotiated. First, fill in  following table:
Division Thompson
Variable Costs/Ton

Market Price of Divisional Product
Excess Capacity (Yes or No)

All costs and market price entries in table above refer to costs and market prices of that division only, and do not include any transfer prices.


1. Determine minimum transfer price which Southern Division muts get for its product, suppose that it is operating at capacity?

2. Compute minimum transfer price that Southern Division must get for its product, suppose that it has significant excess capacity?

3. Suppose that Birch Paper adopts new transfer pricing policy, transferring at variable cost for Southern Division whenever it has excess capacity. Suppose that policy remains same for Thompson, transferring at market price. Compute profit will Thompson make if it "sells" (transfers) product to Northern at $430?

4. describe two significant potential problems with transfer pricing policy described in requirement 4.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M920926

Have any Question? 

Related Questions in Accounting Basics

Practice questionsdescribe the main disadvantages of using

Practice questions: Describe the main disadvantages of using money as a unit of measurement to record business transactions.

Practice questionsfarmer george tractors ltd has

Practice questions: Farmer George Tractors Ltd has £500,000 to invest. The net cash flows of two possible projects are as follows: Year Project 1 Project 2   £ £ 1 80,000 90,000 2 100,000 110,000 3 180,000 190,000 4 140, ...

Assignment 1 -scf-indirect method and net cash flow from

Assignment 1 - (SCF-Indirect Method, and Net Cash Flow from Operating Activities, Direct Method) Comparative balance sheet accounts of Marcus Inc. are presented below. MARCUS INC. COMPARATIVE BALANCE SHEET ACCOUNTS AS OF ...

1 the rule that requires financial statements to reflect

1. The rule that requires financial statements to reflect the assumption that the business will continue operating instead of being closed or sold, unless evidence shows that it will not continue, is the: Going-concern a ...

Bull what three transaction cycles exist in all

• What three transaction cycles exist in all businesses? • Name the major subsystems of the expenditure cycle. • Identify and distinguish between the physical and financial components of the expenditure cycle. • Name the ...

4 discussion questions - intermediate accounting 20please

4 Discussion questions - Intermediate Accounting 20 Please answer each of the 4 question compounds in at least 200 words., for an 800 word total paper. Please asnwer them individually. Thank you 1. What are the differenc ...

Taxation law and practice assignment-questionstephanie

TAXATION LAW AND PRACTICE ASSIGNMENT- QUESTION Stephanie Rogan ran her own advertising company.  Stephanie was an advertising executive with a large advertising agency company, Greater Union Advertisers Pty Ltd.  She lef ...

Question 1 75000 year needed during retirementretirement

Question 1. $75,000 /year needed during retirement Retirement will last 25 years 30 years until retirement 6.0% return before and during retirement 3.25% inflation rate - Use the present value of an annuity (annuity due) ...

Pat sajork has two drawers one drawer contains three gold

Pat Sajork has two drawers. One drawer contains three gold coins, and the other contains one gold coin and two silver coins. We are allowed to choose one drawer, and we will be paid $500 for each gold coin and $100 for e ...

In this assignment complete sections iii and iv of the

In this assignment, complete Sections III and IV of the project. For this part of the assessment prepare a Word document that addresses the critical elements below. Make sure answer each question in a substantive way and ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate