Transfer Pricing MBA Accounting
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Gold Hill Mining Company mines quartz rock at a site in the Boise Basin and then crushes the quartz rock to obtain the gold. Following is information relative to the operation for the month of July 2013:
The operation mined 10,000 cubic yards of rock. There is a market for the rock before crushing.
; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ;Mining Activities ; ; ; ; Crushing Operation
Market Price Per cubic yard ; ; ; ; ; ; ; ; ;$10 ; ; ; ; ; ; ; ; ; ; ; ; $50
Variable cost per cubic yard ; ; ; ; ; ; ; ; ; $5 ; ; ; ; ; ; ; ; ; ; ; ; ;$10
Fixed cost per cubic yard ; ; ; ; ; ; ; ; ; ; ; $2 ; ; ; ; ; ; ; ; ; ; ; ; ; ;$20 ;
Required:
1. ; Compute the transfer price using full cost and calculate the operating income for each operation.
2. ; Compute the transfer price using variable cost and calculate the operating income for each operation.
