kessyjr
Member
- Jan 22, 2013
- 7
- 0
A company operates four factories. Each makes components which are incorporated into the products sold by one or more of the other factories. To encourage a competitive environment the directors have decided that each factory should become a separate profit centre. This will necessitate the use of transfer prices for the inter-factory components.
You are required to:
Click Cost Accounting | Management Accounting and Control Q & A to view today's most read question and it's suggested answer.
You are required to:
- describe three different methods of establishing the transfer prices;
- state which method you should recommend for the company described, giving reasons for your choice; and
- prepare for the one method chosen a policy statement outlining how the pricing system would be operated among the different factories.
Click Cost Accounting | Management Accounting and Control Q & A to view today's most read question and it's suggested answer.