Required
1. John Kline and Russ Fiegel did ask PortCo’scoporate management for guidanceon an appropriate transfer price. Corporate management suggested that they consider using a transfer price based upon variable manufacturing cost plus opportunity cost. Calculate transfer price for the cushioned seat based upon variable manufacturing cost plus opportunity cost.
2. Which alternative transfer pricing system-full cost, variable manufacturing cost, or variable manufacturing costplus opportunity cost-would be best as the underlying concept for an intracompany transfer pricing policy? Explain your answer. (CMA adapted)