Section B - Case 3: Quantum Nexus
Quantum Nexus is a cross-border tech hardware company.
Division A (located in Country X) manufactures microchips. Division B (located in Country Y) assembles these chips into smartphones.
Division A Data:
Variable cost per chip = $120
Fixed cost per chip = $30
External market selling price = $200
Division B Data:
External purchase price for similar chips = $190
Variable processing cost to assemble phone = $50
Final selling price of smartphone = $300
Division A currently has SPARE CAPACITY and can meet Division B's demand without losing external sales.
What is the minimum transfer price Division A should accept?
ACCA · Question 27 · Performance Measurement and Control
Section B - Case 3: Quantum Nexus
Quantum Nexus is a cross-border tech hardware company.
Division A (located in Country X) manufactures microchips. Division B (located in Country Y) assembles these chips into smartphones.
Division A Data:
Variable cost per chip = $120
Fixed cost per chip = $30
External market selling price = $200
Division B Data:
External purchase price for similar chips = $190
Variable processing cost to assemble phone = $50
Final selling price of smartphone = $300
What is the maximum transfer price Division B should be willing to pay?
Answer options:
$250
$190
$200
$300
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