Assignment 6b Scenario Essay Example | Topics and Well Written Essays - 750 words

Assignment 6b Scenario - Essay ExampleThis approach is generally favorable to a manufacturing contribution but not for a retail division.The second approach is the hash outd price approach. In this approach, a manufacturing division and a retail division both negotiate a price. The price of a return is set so that all of the variable costs of the manufacturing business are crested and the price is lower than the mart price, but the manufacturer still makes a profit. This method is commonly used when a manufacturing division has unsold inventory, as it can still sell products by using this method. This method is also more favorable to the retailer than the market price approach.The final approach is the cost price approach. In this method, a product is sold to the retail division at its standard cost or its actual cost. This price may even not be enough to cover all of the expenses of the manufacturing division. This method is the most profitable for the retail division, and it is unlikely to be supported by anyone in charge of manufacturing unless in that location is low demand for the manufacturers product or a massive amount of excess capacity at the manufacturers facility.There are several reasons wherefore market price approach is the transfer determine approach that should be used for Pharmafins new modules. One of the modules forget be produced internally, and to produce it, the follows production facilities will need to add new equipment. Production staffing also needs to be increased by ten percent. These large expenditures will make it necessary to use the pricing method that causes the company to receive the highest price so that it can cover the new expenditures. The marketing department shows that there is a high level of consumer demand for the new machinery. Because of this, the new machinery should sell even if it is sold at a higher price. The other two pricing approaches could lead to a lower price, but they might also lead to revenues that are inadequate to cover