Tito Motors Ltd operates as a decentralised multidivisional

by | Mar 18, 2020 | Uncategorized

  

Tito Motors Ltd operates as a decentralised multidivisional company. Division X purchases T4 components from the Division Y. Division Y’s incremental cost for manufacturing the T4 components is $156 per unit. Division Y is currently working at 69% capacity selling all its production to Division X. The current market price of the T4 components is $231 per unit. If the transfer price is determined as a price that splits the difference between the maximum and minimum prices from the divisions’ standpoint. What would be the resulting transfer price for T4 components (rounded using two decimals)?

  

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