Assume a company has two divisions, Division A and Division B. Division A has provided the following information regarding the one product that it manufactures and sells on the outside market: Selling price per unit (on the outside market) Variable cost per unit Fixed costs per unit (based on capacity) Capacity in units Division B could use Division A's product as a component part in the manufacture of 4,000 units of its own newly-designed product. Division B has received a quote of $58 from an outside supplier for a component part that is comparable to the one that Division A makes If the company's divisional managers are evaluated based their division's profits and Division A is currently selling 18,000 units on the outside market, what is Division A's lowest acceptable transfer price if it were to sell 4,000 units to Division B? Multiple Choice O O O $58.00 $13.00 $ 57 $ 44 $4 20,000 $50.50 $56.00
Assume a company has two divisions, Division A and Division B. Division A has provided the following information regarding the one product that it manufactures and sells on the outside market: Selling price per unit (on the outside market) Variable cost per unit Fixed costs per unit (based on capacity) Capacity in units Division B could use Division A's product as a component part in the manufacture of 4,000 units of its own newly-designed product. Division B has received a quote of $58 from an outside supplier for a component part that is comparable to the one that Division A makes If the company's divisional managers are evaluated based their division's profits and Division A is currently selling 18,000 units on the outside market, what is Division A's lowest acceptable transfer price if it were to sell 4,000 units to Division B? Multiple Choice O O O $58.00 $13.00 $ 57 $ 44 $4 20,000 $50.50 $56.00
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Subject-accounting
![Assume a company has two divisions, Division A and Division B. Division A has provided the following information regarding the one product that it
manufactures and sells on the outside market:
Selling price per unit (on the outside market)
Variable cost per unit
Fixed costs per unit (based on capacity)
Capacity in units
Division B could use Division A's product as a component part in the manufacture of 4,000 units of its own newly-designed product. Division B has
received a quote of $58 from an outside supplier for a component part that is comparable to the one that Division A makes.
If the company's divisional managers are evaluated based their division's profits and Division A is currently selling 18,000 units on the outside market.
what is Division A's lowest acceptable transfer price if it were to sell 4.000 units to Division B?
Multiple Choice
O
O
O
O
$58.00
$13.00
$ 57
$ 44
$4
20,000
$50.50
$56.00](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff7373726-0d35-46ca-aa27-97bcf9126f3a%2Fcf3f6955-186e-4cbc-8d11-6f0b8577ba9c%2F84b9hl9_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Assume a company has two divisions, Division A and Division B. Division A has provided the following information regarding the one product that it
manufactures and sells on the outside market:
Selling price per unit (on the outside market)
Variable cost per unit
Fixed costs per unit (based on capacity)
Capacity in units
Division B could use Division A's product as a component part in the manufacture of 4,000 units of its own newly-designed product. Division B has
received a quote of $58 from an outside supplier for a component part that is comparable to the one that Division A makes.
If the company's divisional managers are evaluated based their division's profits and Division A is currently selling 18,000 units on the outside market.
what is Division A's lowest acceptable transfer price if it were to sell 4.000 units to Division B?
Multiple Choice
O
O
O
O
$58.00
$13.00
$ 57
$ 44
$4
20,000
$50.50
$56.00
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education