Decision on transfer pricing. Materials used by the InstrumentDivision of Ziegler Inc. are currently purchased from outsidesuppliers at a cost of $359 per unit. However, thesame materialsare available from the Components Division. The ComponentsDivision has unused capacity and can produce the materialsneeded bythe Instrument Division at a variable cost of $298 perunit. Assume that a transfer price of $341 has been establishedand that 34,200 units of materials are transferred, with noreduction in the Components Division's current sales.a. Howmuch would Ziegler Inc.'s total operating income increase?b. How much would the Instrument Division's operating incomeincrease?c. How much would the Components Division's• operating income increase?

Step 1: a) Cost of buying from outside suppliers = Number of units * cost per unit = 34,200 * $359…

Answered: Decision on transfer pricing. Materials…

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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6. Materials used by the Instrument Division of XPort Industries are currently purchased from outside suppliers at a cost of $220 per unit. However, the same materials are available from the Components Division. The Components Division has unused capacity and can produce the materials needed by the Instrument Division at a variable cost of $165 per unit. a. If a transfer price of $190 per unit is established and 60,000 units of materials are transferred, with no reduction in the Components Division's current sales, how much would XPort Industries' total income from operations increase? b. How much would the Instrument Division's income from operations increase? c. How much would the Components Division's income from operations increase?
Spark limited has two divisions assembly and electrical the assembly division transfers partially completed components to the electrical division at a predetermined price tye assembly division standard variable production cost per unit is 550 this division has spare capacity and it could sell all its components to outside buyers at 680 per unit in a perfectly competitive market required determine transfr price using general rule What transfer price would you recommend if there was no outside market for the transfered component and the assembly division has sapre capacity explain how negotion between supplying and buying units may be used to set transfer prices how does this relate to the general transfer pricing rule
The materials used by the North Division of Horton Company are currently purchased from outside suppliers at $29 per unit. These same materials are produced by Horton’s South Division. The South Division can produce the materials needed by the North Division at a variable cost of $14 per unit. The division is currently producing 126,000 units and has capacity of 180,000 units. The two divisions have recently negotiated a transfer price of $20 per unit for 54,000 units. By how much will each division's income increase as a result of this transfer? South Division $ North Division $
Assume you are the department B manager for Marleys manufacturing. Marley’s operates under a cost-based transfer structure. Assume you receive the majority of your raw materials from department A, which sells only to department B (they have no outside sales) Assume the market price for the items your department purchase is 15% below what you are being charged by department A of Marley’s manufacturing. Determine the operating income for department B, assuming department A “sold” department B 1,000 unit during the month and department A reduced the selling price to the market price. Round your percentage answer to one decimal.
Decision on transfer pricing Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside suppliers at a cost of $447 per unit. However, the same materials are available from the Components Division. The Components Division has unused capacity and can produce the materials needed by the Instrument Division at a variable cost of $371 per unit. Assume that a transfer price of $425 has been established and that 26,500 units of materials are transferred, with no reduction in the Components Division's current sales. a. How much would Ziegler Inc.'s total operating income increase? b. How much would the Instrument Division's operating income increase? C. How much would the Components Division's operating income increase? d. Any transfer price will cause the total income of the company to as long as the supplier division capacity is toward making materials for products that are ultimately sold to the outside.
Decision on transfer pricing Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside suppliers at a cost of $316 per unit. However, the same materials are available from the Components Division. The Components Division has unused capacity and can produce the materials needed by the Instrument Division at a variable cost of $262 per unit. a. If a transfer price of $288 per unit is established and 27,900 units of materials are transferred, with no reduction in the Components Division's current sales, how much would Ziegler Inc.'s total operating income increase? b. How much would the Instrument Division's operating income increase? $ C. How much would the Components Division's operating income increase?
Decision on Transfer Pricing Materials used by the Instrument Division of XPort Industries are currently purchased from outside suppliers at a cost of $368 per unit. However, the same materials are available from the Components Division. The Components Division has unused capacity and can produce the materials needed by the Instrument Division at a variable cost of $305 per unit. a. If a transfer price of $335 per unit is established and 41,300 units of materials are transferred, with no reduction in the Components Division's current sales, how much would XPort Industries’ total income from operations increase? b. How much would the Instrument Division’s income from operations increase?$ c. How much would the Components Division's income from operations increase?
Find minimum, maximum and appropriate transfer price

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