Business, 28.01.2020 22:51 golffuture666

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? $ do you suppose that machina and java divisions will choose to transfer at that price?
2. if teslum has a transfer pricing policy that requires transfer at market price, what would the transfer price be? $ do you suppose that machina and java divisions would choose to transfer at that price?
3. now suppose that teslum allows negotiated transfer pricing and that machina division can avoid $135 of selling expense by selling to java division. which division sets the minimum transfer price?
i. what is the minimum transfer price? $
ii. which division sets the maximum transfer price?
iii. what is the maximum transfer price? $
iv. do you suppose that machina and java divisions would choose to transfer somewhere in the bargaining range?

Answers: 1

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

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