Business, 30.11.2019 06:31, magics

Teslum inc. has a number of divisions, including the machina division, a producer of high-end espresso makers, and the java division, a chain of coffee shops.
machina division produces the exp-100 model espresso maker that can be used by java division to create various coffee drinks. the market price of the exp-100 model is $950, and the full cost of the exp-100 model is $475. required:
1. if teslum has a transfer pricing policy that requires transfer at full cost, what will the transfer price be?
2. if teslum has a transfer pricing policy that requires transfer at market price, what would the transfer price be?
3. now suppose that teslum allows negotiated transfer pricing and that machina division can avoid $135 of selling expense by selling to java division.
what is the minimum transfer price?
what is the maximum transfer price?

Answers: 3

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Teslum inc. has a number of divisions, including the machina division, a producer of high-end espres...