Kimmel, Accounting, 7eHelp | System AnnouncementsCALCULATORPRINTER VERSION1 BACKNEXTExercise 21-16Crede Inc. has two divisions. Division A makes and sells student desks.Division B manufactures and sells reading lamps.Each desk has a reading lamp as one of its components. Division A canpurchase reading lamps at a cost of $11 from an outside vendor. Division Aneeds 9,300 lamps for the coming year.Division B has the capacity to manufacture 46,700 lamps annually. Sales tooutside customers are estimated at 37,400 lamps for the next year. Readinglamps are sold at $11 each. Variable costs are $7 per lamp and include $1of variable sales costs that are not incurred if lamps are sold internally toDivision A. The total amount of fixed costs for Division B is $72,300.Consider the following independent situations.What should be the minimum transfer price accepted by Division B for the9,300 lamps and the maximum transfer price paid by Division A?Minimum transfer price accepted by Division B%24per unitMaximum transfer price paid by Division A%24per unitSuppose Division B could use the excess capacity to produce and sellexternally 13,950 units of a new product at a price of $7 per unit. TheMacBoo Kimmel, Accounting, 7eS Help | System AnnouncementsCALCULATORPRINTER VERSION( BACKNEXTMaximumransrer pTice pard Dy DIVISIONAper unitSuppose Division B could use the excess capacity to produce and sellexternally 13,950 units of a new product at a price of $7 per unit. Thevariable cost for this new product is $5 per uit. What should be theminimum transfer price accepted by Division B for the 9,300 lamps and themaximum transfer price paid by Division A?Minimum transfer price accepted by Division B%24per unitMaximum transfer price paid by Division A%24per unitIf Division A needs 15,500 lamps instead of 9,300 during the next year,what should be the minimum transfer price accepted by Division B and themaximum transfer price paid by Division A? (Round answers to 2decimal places, e.g. 10.5o.)Minimum transfer price accepted by Division B%24per unitMaximum transfer price paid by Division A%$4per unitClick if you would like to Show Work for thisquestion:Open ShowWorkMacBoo

Calculation of minimum transfer price accepted by Division B Particulars Amount (in $)…

Crede Inc. has two divisions. Division A makes and sells student desks. Division B manufactures and sells reading lamps. Each desk has a reading lamp as one of its components. Division A can purchase reading lamps at a cost of $11 from an outside vendor. Division A needs 9,300 lamps for the coming year. Division B has the capacity to manufacture 46,700 lamps annually. Sales to outside customers are estimated at 37,400 lamps for the next year. Reading lamps are sold at $11 each. Variable costs are $7 per lamp and include $1 of variable sales costs that are not incurred if lamps are sold internally to Division A. The total amount of fixed costs for Division B is $72,300. Consider the following independent situations. What should be the minimum transfer price accepted by Division B for the 9,300 lamps and the maximum transfer price paid by Division A?

Crede Inc. has two divisions. Division A makes and sells student desks. Division B manufactures and sells reading lamps. Each desk has a reading lamp as one of its components. Division A can purchase reading lamps at a cost of $11 from an outside vendor. Division A needs 9,300 lamps for the coming year. Division B has the capacity to manufacture 46,700 lamps annually. Sales to outside customers are estimated at 37,400 lamps for the next year. Reading lamps are sold at $11 each. Variable costs are $7 per lamp and include $1 of variable sales costs that are not incurred if lamps are sold internally to Division A. The total amount of fixed costs for Division B is $72,300. Consider the following independent situations. What should be the minimum transfer price accepted by Division B for the 9,300 lamps and the maximum transfer price paid by Division A?

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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