Question

Manifold, Inc., is a multinational company with divisions around the world. Division X in the United States purchases a part from Division Z in China. There is no outside market for the part. The part is sold for $20 and normally receives a 35 percent markup on cost. What is the transfer price using the resale price method? (Round the answer to two decimal places.)

Answer 1

Answer:

Transfer price would be $ 20 less profit part = $ 13

Explanation:

Is necessary to deduct the 35% of the price.

As there is no outside market for the component, and part is normally sold at price of $20, which includes profit.

Hence transfer price would be $ 20 less profit part = 13