CIMA Advanced Management Accounting P2 Question # 13 Topic 2 Discussion

CIMA Advanced Management Accounting P2 Question # 13 Topic 2 Discussion

P2 Exam Topic 2 Question 13 Discussion:
Question #: 13
Topic #: 2

Company S has two divisions, X and Y. Division X transfers 50,000 component units to Division Y each quarter. The market price of the component is $20. Division X's variable cost is $10 per unit and its fixed cost is $150,000 each quarter.

What price would be credited to Division X for each component that it transfers to Division Y under:

two-part tariff pricing (where the two divisions have agreed that the fixed fee will be $100,000); and dual pricing (based on market price and marginal cost).


A.

Two-part tariff pricing = $10

Dual pricing = $22


B.

Two-part tariff pricing = $12

Dual pricing = $18


C.

Two-part tariff pricing = $10

Dual pricing = $20


D.

Two-part tariff pricing = $13

Dual pricing = $22


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