Question

Jocassee Furniture Manufacturing, Inc., has a division in the United States that produces and sells furniture for discount furniture stores. One type of dining room set is made in the International Division in China. The dining room sets are sold externally in the United States for $450 each. It costs $17.50 per dining room set for shipping and $21 per dining room set for import duties. When the dining room sets are sold externally, Jocassee Furniture Manufacturing spends $34 each for commissions and an average of $1.65 per dining room set for advertising.Using the appropriate Section 482 method, calculate the transfer price. Round your answer to the nearest cent.

Answer 1

The transfer price is $452.85

Step-by-step explanation:

The computation of the transfer price is shown below:

= Selling price + shipping cost + import duties - commission charges - advertising expenses

= $450 + $17.50 + $21 - $34 - $1.65

= $452.85

The shipping cost and import duties should be added whereas commission charges and the advertising expenses should be deducted while computing the transfer price