TP Analysis Flashcards
1
Q
CoB NO excess capacity
A
TP = VC + Opp Cost
2
Q
CoB has excess capacity
A
TP = VC
3
Q
CoC NO outside supplier
A
TP = SP - VC
4
Q
CoC has Outside supplier
A
TP = SP of supplier
5
Q
CoB bears TC
A
TP + TC
6
Q
CoC bears TC
A
TP - TC
7
Q
Forced internal transfer
A
Cost of internal transfer = x
Cost of external transfer = y
Benefit/loss to CoA from internal transfer = y - x
if y-x > 0, Benefit
y-x < 0, Loss
8
Q
Why Force internal transfer
A
Prevent signaling of poor quality or service due to sister companies not buying their own products.
