Cullumber Industries is a decentralized firm. It has two production centres: Vancouver and Kamloops. Each one is evaluated based on its return on investment. Vancouver has the capacity to manufacture 130,000 units of component TR222. Vancouver's variable costs are $153 per unit. Kamloops uses component TR222 in one of its products. Kamloops adds $93 of variable costs to the component and sells the final product for $465. Consider the following independent situations:
Cullumber Industries is a decentralized firm. It has two production centres: Vancouver and Kamloops. Each one is evaluated based on its return on investment. Vancouver has the capacity to manufacture 130,000 units of component TR222. Vancouver's variable costs are $153 per unit. Kamloops uses component TR222 in one of its products. Kamloops adds $93 of variable costs to the component and sells the final product for $465. Consider the following independent situations:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please do not give solution in image format thanku
Transcribed Image Text:Cullumber Industries is a decentralized firm. It has two production centres: Vancouver and Kamloops. Each one is evaluated based on
its return on investment. Vancouver has the capacity to manufacture 130,000 units of component TR222. Vancouver's variable costs
are $153 per unit. Kamloops uses component TR222 in one of its products. Kamloops adds $93 of variable costs to the component
and sells the final product for $465.
Consider the following independent situations:
Vancouver can sell all 130,000 units of TR222 on the open market at a price of $252 per unit. Kamloops is willing to buy 13,000 of
those units.
What should the transfer price be?
Transfer price $
Of the 130,000 units of component TR222 it can produce, Vancouver can sell 91,000 units on the open market at a price of $252
per unit. Kamloops is willing to buy an additional 13,000 units.
What should the minimum transfer price be?
Minimum transfer price
eTextbook and Media
Transfer price
per unit
$
$
Of the 130,000 units of component TR222 it can produce. Vancouver can sell 104,000 units on the open market at a price of $252
per unit. Kamloops is willing to buy an additional 39,000 units.
What should the transfer price be? (Round answer to 2 decimal places, e.g. 52.75.)
per unit
per unit
Expert Solution
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 5 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education