Division Y of the same company. The managers of the divisions are evaluated based on their divisional profits. Division X: Capacity in units Number of units being sold to outside customers Selling price per unit to outside customers Variable costs per unit Fixed costs per unit (based on capacity) Division Y: Number of units needed for production Purchase price per unit now being paid to an outside supplier Case A 92,000 101,000 92,000 80,000 $ 59 $29 $ 23 $ 15 $8 $4 B 21,000 $ 51 21,000 $ 30
Division Y of the same company. The managers of the divisions are evaluated based on their divisional profits. Division X: Capacity in units Number of units being sold to outside customers Selling price per unit to outside customers Variable costs per unit Fixed costs per unit (based on capacity) Division Y: Number of units needed for production Purchase price per unit now being paid to an outside supplier Case A 92,000 101,000 92,000 80,000 $ 59 $29 $ 23 $ 15 $8 $4 B 21,000 $ 51 21,000 $ 30
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Do not give image format
![Required information
[The following information applies to the questions displayed below.]
In each of the cases below, assume Division X has a product that can be sold to outside customers or to
Division Y of the same company. The managers of the divisions are evaluated based on their divisional
profits.
Division X:
Capacity in units
Number of units being sold to outside
customers
Selling price per unit to outside
customers
Variable costs per unit
Fixed costs per unit (based on
capacity)
Division Y:
Number of units needed for production
Purchase price per unit now being
paid to an outside supplier
Required Required
2A
2B
Required:
2. Refer to the data in case B above. In this case, there will be no savings in variable selling costs on intracompany
sales.
Required
2C
A
a. What is the lowest acceptable transfer price from the perspective of the selling division?
b. What is the highest acceptable transfer price from the perspective of the buying division?
c. What is the range of acceptable transfer prices (if any) between the two divisions? If the managers are free to
negotiate and make decisions on their own, will a transfer probably take place?
Case
Complete this question by entering your answers the tabs below.
Identify the range of acceptable transfer prices (if any):
OThere is not a range of acceptable transfer prices.
There is a range of acceptable transfer prices as shown
below:
s
Transfer
price
S
Are the managers likely to agree on a transfer price?
OYes
ONO
B
92,000 101,000
92,000
80,000
$ 59
$ 29
$ 23
$ 15
$8
$4
21,000
21,000
$ 51
$ 30
< Required 2B
What is the range of acceptable transfer prices (if any) between the two divisions? If the
managers are free to negotiate and make decisions on their own, will a transfer probably
take place?
Required 2C >
Show less](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F475b0c8f-9dd7-487b-9264-3e04ebb75dff%2Fe3b08860-02a4-48f7-abbd-f80ead6b68af%2Fiextd8_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
In each of the cases below, assume Division X has a product that can be sold to outside customers or to
Division Y of the same company. The managers of the divisions are evaluated based on their divisional
profits.
Division X:
Capacity in units
Number of units being sold to outside
customers
Selling price per unit to outside
customers
Variable costs per unit
Fixed costs per unit (based on
capacity)
Division Y:
Number of units needed for production
Purchase price per unit now being
paid to an outside supplier
Required Required
2A
2B
Required:
2. Refer to the data in case B above. In this case, there will be no savings in variable selling costs on intracompany
sales.
Required
2C
A
a. What is the lowest acceptable transfer price from the perspective of the selling division?
b. What is the highest acceptable transfer price from the perspective of the buying division?
c. What is the range of acceptable transfer prices (if any) between the two divisions? If the managers are free to
negotiate and make decisions on their own, will a transfer probably take place?
Case
Complete this question by entering your answers the tabs below.
Identify the range of acceptable transfer prices (if any):
OThere is not a range of acceptable transfer prices.
There is a range of acceptable transfer prices as shown
below:
s
Transfer
price
S
Are the managers likely to agree on a transfer price?
OYes
ONO
B
92,000 101,000
92,000
80,000
$ 59
$ 29
$ 23
$ 15
$8
$4
21,000
21,000
$ 51
$ 30
< Required 2B
What is the range of acceptable transfer prices (if any) between the two divisions? If the
managers are free to negotiate and make decisions on their own, will a transfer probably
take place?
Required 2C >
Show less
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 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.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