Anstell Corporation operates a Manufacturing Division and a Marketing Division. Both divisions are evaluated as profit centers. Marketing buys products from Manufacturing and packages them for sale. Manufacturing sells many components to third parties in addition to Marketing. Selected data from the two operations follow: Capacity (units) Sales price* Variable costst Fixed costs Manufacturing 250,000 $ 310 Marketing 125,000 $ 940 $ 142 $ 366 $ 107,500 $ 727,500 * For Manufacturing, this is the price to third parties. t For Marketing, this does not include the transfer price paid to Manufacturing. Suppose Manufacturing is located in Country X with a tax rate of 35 percent and Marketing in Country Y with a tax rate of 15 percent. Required: a. Current output in Manufacturing is 125,000 units. Marketing requests an additional 25,000 units to produce a special order. What transfer price would you recommend? b. Suppose Manufacturing is operating at full capacity. What transfer price would you recommend? c. Suppose Manufacturing is operating at 230,000 units. What transfer price would Note: Round your answer to 2 decimal places. you recommend? a. Transfer price $ 142 per unit b. Transfer price $ 310 per unit c. Transfer price per unit
Anstell Corporation operates a Manufacturing Division and a Marketing Division. Both divisions are evaluated as profit centers. Marketing buys products from Manufacturing and packages them for sale. Manufacturing sells many components to third parties in addition to Marketing. Selected data from the two operations follow: Capacity (units) Sales price* Variable costst Fixed costs Manufacturing 250,000 $ 310 Marketing 125,000 $ 940 $ 142 $ 366 $ 107,500 $ 727,500 * For Manufacturing, this is the price to third parties. t For Marketing, this does not include the transfer price paid to Manufacturing. Suppose Manufacturing is located in Country X with a tax rate of 35 percent and Marketing in Country Y with a tax rate of 15 percent. Required: a. Current output in Manufacturing is 125,000 units. Marketing requests an additional 25,000 units to produce a special order. What transfer price would you recommend? b. Suppose Manufacturing is operating at full capacity. What transfer price would you recommend? c. Suppose Manufacturing is operating at 230,000 units. What transfer price would Note: Round your answer to 2 decimal places. you recommend? a. Transfer price $ 142 per unit b. Transfer price $ 310 per unit c. Transfer price per unit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Anstell Corporation operates a Manufacturing Division and a Marketing Division. Both divisions are evaluated as profit centers.
Marketing buys products from Manufacturing and packages them for sale. Manufacturing sells many components to third parties in
addition to Marketing. Selected data from the two operations follow:
Capacity (units)
Sales price*
Variable costst
Fixed costs
Manufacturing
250,000
$ 310
Marketing
125,000
$ 940
$ 142
$ 366
$ 107,500
$ 727,500
*
For Manufacturing, this is the price to third parties.
t For Marketing, this does not include the transfer price paid to Manufacturing.
Suppose Manufacturing is located in Country X with a tax rate of 35 percent and Marketing in Country Y with a tax rate of 15
percent.
Required:
a. Current output in Manufacturing is 125,000 units. Marketing requests an additional 25,000 units to produce a special order.
What transfer price would you recommend?
b. Suppose Manufacturing is operating at full capacity. What transfer price would you recommend?
c. Suppose Manufacturing is operating at 230,000 units. What transfer price would
Note: Round your answer to 2 decimal places.
you recommend?
a. Transfer price
$
142 per unit
b. Transfer price
$
310 per unit
c. Transfer price
per unit
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