21.4 Transfer Prices The Hazel Division's unit sales price is $100 and its unit variable cost is $60.Hazel has capacity to produce 10,000 units and is currently selling 8,000 units externally. Fixedcosts per unit are $32. If the Hazel Division sells 2,000 units to the Wolf Division, what is theopportunity cost per unit to the Hazel Division?

The opportunity cost per unit to the Hazel Division can be calculated by considering the…

Answered: 21.4 Transfer Prices The Hazel…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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1. What would be the gross margin for FPD if it accepted the transfer price that will be charged by CD?
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QUESTION 38 Insourcing incurs an annual fixed cost of $30,000 and a variable cost of $60 per unit. Outsourcing incurs an annual fixed cost of $50,000 and a variable cost of $20 per unit. Using the Make-or-Buy analysis, what is the indifference point between the two alternatives? (Note your answer for question 39) a) 500 units b) 1000 units c) 1500units d) 2000 units e) 800 units QUESTION 39 For the scenario in Q38, anticipated demand is then forecast to be 1000 units. Which option would be most appropriate? a) Insource b) Outsource c) Either option d) Not enough information to evaluate e) None
Division A makes a part with the following characteristics: Production capacity in units 15,000 units Selling price to outside customers $30 Variable cost per unit $20 Total fixed costs $60,000 Division B, another division of the same company, would like to purchase 5,000 units of the part each period from Division A. Suppose that Division A has ample idle capacity to handle all of Division B's needs without any increase in fixed costs and without cutting into sales to outside customers. What would be the minimum acceptable price that Division A would accept to transfer 5,000 units of the part to Division B? $30 $20 $10 None of the above 2. Jack Sparrow, Inc. produces and sells 20,000 units of Product X each month. The selling price of Product X is $30 per unit, and variable expenses are $21 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $50,000 of the $250,000 in fixed expenses charged…
If fixed costs are $1,450,000, the unit selling price is $205, and the unit variable costs are $128, what are the break-even sales (units) if fixed costs are increased by $30,300? a. 28,837 units b. 23,070 units c. 19,225 units d. 15,380 units
7. Division X produces a single product for both Division Y and an external market. It has spare capacity to produce another 20,000 items. Additional details for Division X are as follows: Information for Division X Price of product sold to outside market Current transfer price Variable cost per item made in division Fixed costs per item (based on budget) Division Y has requested a further 5,000 items. £25 £20 £12 £6 What is the minimum price that Division X should ask per item? (a) £12 (b) £18 (c) £20 (d) £25
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20. If fixed costs are $262,000, the unit selling price is $32, and the unit variable costs are $21, the break-even sales (units) if fixed costs are reduced by $45,300 is a.15,760 units b.19,700 units c.29,550 units d.23,640 units

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