AA and BB are two divisions of the ZZ group

Author:

January 7th, 2018

AA and BB are two divisions of the ZZ group. The AA division manufactures electrical components which it sells to other divisions and external customers.The BB division has designed a new product, Product B, and has asked AA to supply the electrical component, Component A, that is needed in the new product. This will be a completely new style of component. Each unit of Product B will require one Component A. This component will not be sold by AA to external customers. AA has quoted a transfer price to BB of $45 for each unit of Component A.It is the policy of the ZZ group to reward managers based on their individual division’s return on capital employed.Details of the monthly production for each division are as follows:AA divisionOutputComponent A will be produced in batches of 1,000 units. The maximum capacity is 6,000 components per month.Variable cost$15 per componentFixed costs$50,000 (these are incurred specifically to produce Component A)BB divisionOutput Product B will be produced in batches of 1,000 units. The maximum customer demand is 6,000 units of Product B per month.Variable cost$9 per unit plus the cost of Component AFixed costs$75,000 (these are incurred specifically to produce Product B)The relationship between monthly customer demand and the selling price of Product B is shown below:DemandSelling price per unit1,000 units$1202,000 units$1103,000 units$1004,000 units$905,000 units$806,000 units$67Required:(a) Calculate, based on a transfer price of $45 per Component A, the monthly profit that would be earned as a result of selling Product B by:(i) BB division(ii) AA division(iii) ZZ group(9 marks)(b) Calculate the maximum monthly profit from the sale of Product B for the ZZ group.(4 marks)(c) Calculate, using the marginal cost of Component A as the transfer price, the monthly profit that would be earned as a result of selling Product B by:(i) BB division(ii) AA division(iii) ZZ group(5 marks)(d) Discuss, using the above scenario, the problems of setting a transfer price and suggest a transfer pricing policy that would help the ZZ group to overcome the transfer pricing problems that it faces.(7 marks)(Total for Question Seven = 25 marks)

Calculate the price

Make an order in advance and get the best price

Type of paper

Academic level

Deadline

Pages (550 words)

$0.00

*Price with a welcome 15% discount applied.

Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.

We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.

How it works

Receive a 100% original paper that will pass Turnitin from a top essay writing service

step 1

Upload your instructions

Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.

step 2

Control the process

Once you place an order with our professional essay writing services, we will email you login details to your account. There, you'll communicate with the writer and support team and track the writer's progress.

step 3

Download your paper on time

As soon as your work is ready, we’ll notify you via email. You'll then be able to download it from your account and request a revision if needed. Please note that you can also rate the writer's work in your account.

Pro service tips

How to get the most out of your experience with Essay Fountain

One writer throughout the entire course

If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.

The same paper from different writers

You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."

Copy of sources used by the writer

Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.

Testimonials

See why 20k+ students have chosen us as their sole writing assistance provider

Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.

Psychology

Awesome work!

Customer 452521, June 27th, 2020

Economics

Satisfactory

Customer 452963, November 11th, 2021

Marketing

Thank you so much!

Customer 453015, December 13th, 2021

Social Work and Human Services

The support team was available upon request. For the past two semesters I have been stressing on receiving my assignments on expected achievement dates. I value your service and hope that you all would improve your teamwork. I have been using this service now for 2-years and was totally satisfied. With this being said, I have spent at least a thousand plus dollars with this company. Knowing there are other competing companies that are on the market for a lot less than you guys are charging. "I trust that you all would get it together and avoid last minute communication which increases stress to the student."

Customer 452919, March 27th, 2024

English 101

Great work!!

Customer 452989, November 21st, 2021

Sociology

Thank you for your teamwork. I have only used Solutions to assist me with my assignments.

Customer 452919, March 1st, 2023

Sociology

Thank you!

Customer 452919, April 26th, 2022

Health Care

Thank you for getting this paper done in a timely manner

Customer 452641, February 20th, 2021

Sociology

The writer covered all points as expected by the professor. Thank you for your commitment to serve students.

Customer 452919, February 21st, 2024

Sociology

I eant to thank the enttir team. A special thanks to Simon!

Customer 452919, November 2nd, 2021

Sociology

Thank you, the journal wa submitted today and I hope to continue receiving services.

Customer 452919, October 28th, 2021

Education

Thank you so much!!! Will use this service again highly recommend this site!!!

Customer 452739, May 2nd, 2021

11,595

Customer reviews in total

96%

Current satisfaction rate

3 pages

Average paper length

37%

Customers referred by a friend

OUR GIFT TO YOU

15% OFF your first order

Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.

Claim my 15% OFF Order in Chat