Division A makes a part that it sells to customers outside of the company. Data concerning this part appearbelow:Сaрacity300,000Demand250,000Selling price$135VC per unit$78Total FC$150,000Division B would like to use the part manufactured by Division A in one of its products. Division B currentlypurchases a similar part madeeach period. If Division A sells to Division B rather than to outside customers, the variable cost be unit would be$5 lower. What should be the lowest acceptable transfer price from the perspective of Division A?an outside company for $38 per unit Division B requires 5,000 units of the part

Transfer price is the price which is levied on the purchase of goods and services from one…

Division A makes a part that it sells to customers outside of the company. Data concerning this part appear below: Сaрacity 300,000 Demand 250,000 Selling price $135 VC per unit $78 Total FC $150,000 Division B would like to use the part manufactured by Division A in one of its products. Division B currently purchases a similar part made by an outside company for $38 per unit Division B requires 5,000 units of the part each period. If Division A sells to Division B rather than to outside customers, the variable cost be unit would be $5 lower. What should be the lowest acceptable transfer price from the perspective of Division A?

Division A makes a part that it sells to customers outside of the company. Data concerning this part appear below: Сaрacity 300,000 Demand 250,000 Selling price $135 VC per unit $78 Total FC $150,000 Division B would like to use the part manufactured by Division A in one of its products. Division B currently purchases a similar part made by an outside company for $38 per unit Division B requires 5,000 units of the part each period. If Division A sells to Division B rather than to outside customers, the variable cost be unit would be $5 lower. What should be the lowest acceptable transfer price from the perspective of 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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2. Division X makes a part that it sells to customers outside of the company. Data concerning this part appear below: Selling Price to Outside Customers Variable Cost per Unit Total Fixed Costs Capacity in Units 70 36 $300,000 25,000 $ $ Division Y of the same company would like to use the part manufactured by Division X in one of its products. Division Y currently purchases a similar part made by an outside company for $65 per unit and would substitute the part made by Division X. Division Y requires 5,000 units of the part each period. Division X is currently selling 18,000 units to outside customers. According to the transfer pricing formula, what is the lowest acceptable limit on the transfer price for Division X? A) $48. $36. B) $65. C) D) $70.
Kando Company incurs a $11.00 per unit cost for Product A, which it currently manufactures and sells for $18.50 per unit. Instead of manufacturing and selling this product, the company can purchase it for $4.00 per unit and sell it for $16.00 per unit. If it does so, unit sales would remain unchanged and $4.00 of the $11.00 per unit costs of Product A would be eliminated. 1. Prepare Incremental cost analysis. Should the company continue to manufacture Product A or purchase it for resale? (Round your answers to 2 decimal places.) Selling price per unit Cost per unit to make Cost per unit to buy Cost per unit not eliminated if bought Income per unit Company should: Make Buy
Division A makes a part with the following characteristics: **USE IMAGE ATTAHCED TO SEE** a) Division B, another division of the same company, would like to purchase 5,000 units of the part each period from Division A. Division A is currently selling 10,000 units to its outside customers. What should be the lowest acceptable transfer price from the perspective of Division A? b}Refer back to your answer in the last problem. Division B is now purchasing these parts from an outside supplier at a price of $24 each. If Division B begins to purchase the 5,000 parts from Division A rather than the outside supplier, what is the company as a whole change in net income? c} Division B, another division of the same company, would like to purchase 5,000 units of the part each period from Division A. Division A is currently selling 10,000 units to its outside customers. IF the transfer is made, variable costs will decrease by $2 per unit. What should be the lowest acceptable transfer price…
English company operates two segments, the Reading Segment, and the Language Segment. Reading Segment produces component A that is necessary in the processing of the products offered by Language Segment but can also be sold to outside customers. English 10,000 undecided to transfer to from Reading to Language at with special modification to Language at P70.00 Reading currently sells the component A to external customers at P120.00. Variable Cost per unit is P43 and fixed cost per unit based on normal operations is at P12. Reading is currently operating at full capacity and the VC in producing component A is at P68. How much is the minimum Transfer price that Reading can accept?
Company E has two divisions, Division A and Division B. Division A is currently buying Component X from an external seller for $13. Division B produces Component X and has excess capacity. Using the following data, what would the transfer price per unit if Division A purchased Component X from Division B at the market-based transfer price? • Variable cost per unit $6 • Fixed cost per unit 1.65 • Division B sales price of Component X 14.50
The X and Y Divisions are divisions in the same company. Currently the Y Division buys a part from X Division for P390 per unit. The X Division wants to increase the price of the part it sells to Y Division by P60 to P450. The manager of the Y Division has stated that he cannot pay that much insofar as the division's profit goes below zero. The manager of the Y Division can buy the part from an outside supplier for P448 per unit. The cost data pertaining to the part is supplied by the X Division: Direct materials P136.00 Direct labor 200.00 Variable overhead 40.00 Fixed overhead 38.40 A. If X Division does not produce the parts for the Y Division, it will be able to avoid one-third of the fixed manufacturing overhead costs. The X Division has excess capacity but no alternative uses for the facilities. Y Division will sell the finished product with the part (from X Division) for P1,000 after incurring additional processing costs of P600. What is the…
(Appendix 11A) Division A makes a part that it sells to customers outside of the company. Data concerning this part appear below: $40 $30 $10,000 20,000 Selling Price to Outside Customers Variable cost per Unit Total Fixed Costs Capacity in Units Division B of the same company would like to use the part manufactured by Division A in one of its products. Division B currently purchases a similar part made by an outside company for $38 per unit and would substitute the part made by Division A. Division B requires 5,000 units of the part each period. Division A has ample capacity to produce the units for Division B without any increase in fixed costs and without cutting into sales to outside customers. If Division A sells to Division B rather than to outside customers, the variable cost per unit would be $1 lower. What should be the lowest acceptable transfer price from the perspective of Division A? Multiple Choice $40. $30. $29.
with solution pls
What are the correct answers to questions 1 and 2?
Kando Company incurs a $9 per unit cost for Product A, which it currently manufactures and sells for $13.50 per unit. Instead of manufacturing and selling this product, the company can purchase it for $5 per unit and sell it for $12 per unit. If it does so, unit sales would remain unchanged and $5 of the $9 per unit costs of Product A would be eliminated. Should the company continue to manufacture Product A or purchase it for resale?
Company E has two divisions, Division A and Division B. Division A is currently buying Component X from an external seller for $12. Division B produces Component X and has excess capacity. Using the following data, what would the transfer price per unit if Division A purchased Component X from Division B at the full-cost-based transfer price? • Variable cost per unit $6.69 Fixed cost per unit 1.47 . Division B sales price of Component X 14,50
Division A makes a part that it sells to customers outside of the company. Data concerning this part appear below: Selling price to outside customers $ 75 Variable cost per unit $ 50 Total fixed costs $ 400,000 Capacity in (units) 25,000 Division B of the same company would like to use the part manufactured by Division A in one of its products. Division B currently purchases a similar part made by an outside company for $70 per unit and would substitute the part made by Division A. Division B requires 5,000 units of the part each period. Division A can already sell all of the units it can produce on the outside market. What should be the lowest acceptable transfer price from the perspective of Division A? Multiple Choice $75. $66. $50. $16.