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Don J. Monroe
Gold Miners Association
4287 Ren-Lvesque Blvd
Montreal, QC H3B 4W8
June 22, 2010
To:
Event Manager
Silver Lining Enterprise
4457 Carling Avenue
Montreal, QC H3B 4W8
Dear Sir / Madam
Re: Cancellation of Booking
I am writing to request for a cancellation of my booking of your
services for my planned function on August 10, 2010. I had requested
for your services in planning for my Associations annual dinner at the
Majestic Hotel but due to unforeseen circumstances, such as the
unavailability of the venue on that day, the event has to be cancelled
as no alternative date was given by the Hotel. A recommendation
letter is written to lend support to another party for some benefit; for
example, the sender of a recommendation letter may propose
someone for a job in a company or for an individual to enter into a
school or prestigious environment. The recommender should be a
person of authority in order to influence the recipient on a favorable
decision.
From:
Caryn Johnson
Transferprice:example2
Min.transferprice=incremental(outlay)costs/unittopointoftransfer+
opportunitycost/unittothesupplydivision.
TheSFManufacturingCo.hastwodivisionsinIowa,theSupplyDivisionandtheBUY
Division.Currently,theBUYDivisionbuysapart(3,000units)fromSupplyfor$12.00
perunit.SupplywantstoincreasethepricetoBUYto$15.00.ThecontrollerofBUY
claimsthatshecannotaffordtogothathigh,asitwilldecreasethedivisionsprofitto
nearzero.BUYcanpurchasethepartfromanoutsidesupplierfor$14.00.Thecost
figuresforSupplyare:
DirectMaterials$3.25
DirectLabor4.75
VariableOverhead0.60
FixedOverhead1.20
A.IfSupplyceasestoproducethepartsforBUY,itwillbeabletoavoidonethirdofthe
fixedMOH.Supplyhasnoalternativeusesforitsfacilities.ShouldBUYcontinuetoget
theunitsfromSupplyorstarttopurchasetheunitsfromtheoutsidesupplier?(Fromthe
standpointofSFasawhole).
(Whatisthemin.&max.transferpriceifBUYandSUPPLYnegotiate?)
MAX.TP=$14.00/unit(mostBUYiswillingtopay,marketprice)
MIN.TP=$8.60+(1/3*1.20)=$9.00
MAX>MINsotransferinternallywouldhappenandbeinthebestinterestsofSF!
Now,assumethatSupplycouldusethefacilitiescurrentlyusedtoproducethe3,000
unitsforBUYtomake5,000unitsofadifferentproduct.Thenewproductwillsellfor
$16.00andhasthefollowingcosts:
DirectMaterials$3.00
DirectLabor4.30
VariableOverhead5.40
B.Whatisthemin.&max.transferpriceifBUYandSUPPLYnegotiate?
SupplyVC=$8.60+lostCM
LostCM=$1612.70=$3.30/unitofnewproduct=$16,500totallostCM
OR$16,500/3,000unitstransferredtoBUY=$5.50/unitmadeforBUY
MAX.TP=$14.00
MIN.TP=$8.60+$5.50=$14.10
C.Whatshouldbedonefromthecompanyspointofview?Why?
SFisbetteroffforSUPPLYtomakenewproductandBUYtogetpartfrom
outside.