Current Attempt in Progress The Appraisal Department of Riverbed Bank performs appraisals of business properties for loans being considered by the bank an appraisals for home buyers that are financing their purchase through some other financial institution. The department charges $1 per home appraisal, and its variable costs are $143 per appraisal. Recently, Riverbed Bank has opened its own Home-Loan Department and wants the Appraisal Department to perform 1,272 appraisals on all Riverbed Bank-financed home loans. Bank management feels that the cost of these appraisals to the Home-Loan Department should be $159. The variable cost per appraisal to the Home-Loan Department would be $7 less than those performe outside customers due to savings in administrative costs. (a) Determine the minimum transfer price, assuming the Appraisal Department has excess capacity. Minimum transfer price $ (b) Determine the minimum transfer price, assuming the Appraisal Department has no excess capacity. Minimum transfer price $ (c) Assuming the Appraisal Department has no excess capacity, should management force the department to charge the Home-Loan Department only $159?

Current Attempt in Progress The Appraisal Department of Riverbed Bank performs appraisals of business properties for loans being considered by the bank an appraisals for home buyers that are financing their purchase through some other financial institution. The department charges $1 per home appraisal, and its variable costs are $143 per appraisal. Recently, Riverbed Bank has opened its own Home-Loan Department and wants the Appraisal Department to perform 1,272 appraisals on all Riverbed Bank-financed home loans. Bank management feels that the cost of these appraisals to the Home-Loan Department should be $159. The variable cost per appraisal to the Home-Loan Department would be $7 less than those performe outside customers due to savings in administrative costs. (a) Determine the minimum transfer price, assuming the Appraisal Department has excess capacity. Minimum transfer price $ (b) Determine the minimum transfer price, assuming the Appraisal Department has no excess capacity. Minimum transfer price $ (c) Assuming the Appraisal Department has no excess capacity, should management force the department to charge the Home-Loan Department only $159?

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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