Division E could use Division D's product as a component part in the manufacture of 4,000 units of its own newly-designed product. Division E hasreceived a quote of $58 from an outside supplier for a component part that is comparable to the one that Division D makes.If the company's divisional managers are evaluated based on their division's profits and Division D is currently selling 15,000 units on the outside market,what is Division D's lowest acceptable transfer price if it were to sell 4,000 units to Division E?Multiple ChoiceO$44$50$48$52 Assume a company has two divisions, Division D and Division E. Division D has provided the following information regarding the one product that itmanufactures and sells on the outside marketSelling pr por unit (on the outside market)Variable co.. per unitFixed costs per unit (based on capacity)Capacity in units$ 60$ 44$820,000Division E could use Division D's product as a component part in the manufacture of 4,000 units of its own newly-designed product Division E hasreceived a quote of $58 from an outside supplier for a component part that is comparable to the one that Division D makesIf the company's divisional managers are evaluated based on their division's profits and Division D is currently selling 15,000 units on the outside market.what is Division D's lowest acceptable transfer price if it were to sell 4,000 units to Division E?

Variable costs are costs that varies with the change in the level of output whereas fixed costs are…

Assume a company has two divisions, Division D and Division E Division D has provided the following information regarding the one product that manufactures and sells on the outside market Selling pr nor unit (on the outside market) Variable co per unit Fixed costs per unit (based on capacity) Capacity in unita $ 60 $44 $8 20,000 Division E could use Division D's product as a component part in the manufacture of 4,000 units of its own newly-designed product. Division E has received a quote of $58 from an outside supplier for a component part that is comparable to the one that Division D makes If the company's divisional managers are evaluated based on their division's profits and Division D is currently selling 15.000 units on the outside market. what is Division D's lowest acceptable transfer price if it were to sell 4,000 units to Division E?

Assume a company has two divisions, Division D and Division E Division D has provided the following information regarding the one product that manufactures and sells on the outside market Selling pr nor unit (on the outside market) Variable co per unit Fixed costs per unit (based on capacity) Capacity in unita $ 60 $44 $8 20,000 Division E could use Division D's product as a component part in the manufacture of 4,000 units of its own newly-designed product. Division E has received a quote of $58 from an outside supplier for a component part that is comparable to the one that Division D makes If the company's divisional managers are evaluated based on their division's profits and Division D is currently selling 15.000 units on the outside market. what is Division D's lowest acceptable transfer price if it were to sell 4,000 units to Division E?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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…
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Division A of SLG Company produces a part it sells to other companies. Sales and cost data for the part are as follows: Capacity in units 60,000 units Selling price per unit O $27 per unit O $39 per unit O $36 per unit O $41 per unit Variable cost per unit O None of the above. Fixed cost per unit at capacity Division B, another division of SLG Company, would like to buy this part from Division A. Division B is currently purchasing the part from an outside source at $38 per unit. If Division A sells to Division B, then $1 in Division A's variable costs can be avoided. Assume Division A has enough idle capacity to handle all of Division B's needs without any increase in fixed costs and without interfering with outside sales. According to the transfer pricing guidelines, what is the lowest acceptable transfer price from the perspective of Division A? $40 per unit $28 per unit $9 per unit