Division Y has asked Division X of the same company to supply it with 9,000 units of part L763 this year to use in one of its products.Division Y has received a bid from an outside supplier for the parts at a price of $53 per unit. Division X has the capacity to produce36,000 units of part L763 per year. Division X expects to sell 32,400 units of part L763 to outside customers this year at a price of$58.00 per unit. To fill the order from Division Y, Division X would have to cut back its sales to outside customers. Division X producespart L763 at a varlable cost of $45 per unit. The cost of packing and shipping the parts for outside customers is $2 per unit. Thesepacking and shipping costs would not have to be incurred on sales of the parts to Division Y.Required:a. What is the range of transfer prices within which both the Divisions' profits would increase as a result of agreeing to the transfer of9,000 parts this year from Division X to Division Y? (Round your final answers to 2 decimal places.)Range of transfer prices:< Transfer price<b. Is it in the best interests of the overall company for this transfer to take place?O YesNo

The value attached to the commodities or services moved between related parties is known as transfer…

Division Y has asked Division X of the same company to supply it with 9,000 units of part L763 this year to use in one of its products. Division Y has received a bid from an outside supplier for the parts at a price of $53 per unit. Division X has the capacity to produce 36.000 units of part L763 per year. Division X expects to sell 32,400 units of part L763 to outside customers this year at a price of $58.00 per unit. To fill the order from Division Y, Division X would have to cut back its sales to outside customers. Division X produce part L763 at a variable cost of $45 per unit. The cost of packing and shipping the parts for outside customers is $2 per unit. These packing and shipping costs would not have to be incurred on sales of the parts to Division Y. Required: a. What is the range of transfer prices within which both the Divisions' profits would increase as a result of agreeing to the transfer of 9,000 parts this year from Division X to Division Y? (Round your final answers to 2 decimal places.) Range of transfer prices: < Transfer price < b. Is it in the best interests of the overall company for this transfer to take place?

Division Y has asked Division X of the same company to supply it with 9,000 units of part L763 this year to use in one of its products. Division Y has received a bid from an outside supplier for the parts at a price of $53 per unit. Division X has the capacity to produce 36.000 units of part L763 per year. Division X expects to sell 32,400 units of part L763 to outside customers this year at a price of $58.00 per unit. To fill the order from Division Y, Division X would have to cut back its sales to outside customers. Division X produce part L763 at a variable cost of $45 per unit. The cost of packing and shipping the parts for outside customers is $2 per unit. These packing and shipping costs would not have to be incurred on sales of the parts to Division Y. Required: a. What is the range of transfer prices within which both the Divisions' profits would increase as a result of agreeing to the transfer of 9,000 parts this year from Division X to Division Y? (Round your final answers to 2 decimal places.) Range of transfer prices: < Transfer price < b. Is it in the best interests of the overall company for this transfer to take place?

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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