Here are the key details provided:
- Des Moines Valley Company has two divisions: Computer Services and Management Advisory Services
- Each division performs work for the other division in addition to external customers
- In 19x1:
- Computer Services earned $200,000 from external customers
- Management Advisory Services earned $350,000 from external customers
- Computer Services worked 3,000 hours for Management Advisory Services
The question asks about transfer pricing between the two divisions. Transfer pricing is the price charged for goods and services transferred between different parts of the same company. Since each division performs work for the other, an appropriate transfer price must be set for the 3,000 hours of work Computer Services did for Management Advisory Services.