Domagisko Company's Division 'S' (selling division) produces a small tool used by other companie. part in their products. Cost and sales data related to the small tool are given below: Selling price per unit Variable costs per unit Fixed costs per unit* based on capacity of 40,000 tools per year. P 50 P 30 P 12 The company's Division 'B' (buying division) is introducing a new product that will use the same to the one produced by Division S. An outside supplier has quoted the Division B a price of P 48 Division B would like to purchase the tools from Division S, only if an acceptable transfer pri worked out. REQUIRED: Consider the following independent cases: 1. Division S has ample idle capacity to handle all the Division B's needs: A) What is the minimum transfer price for Division S? B) What is the maximum transfer price for Division B? 2. Division S is presently selling all the tools it can produce to outside customers:

Domagisko Company's Division 'S' (selling division) produces a small tool used by other companie. part in their products. Cost and sales data related to the small tool are given below: Selling price per unit Variable costs per unit Fixed costs per unit* based on capacity of 40,000 tools per year. P 50 P 30 P 12 The company's Division 'B' (buying division) is introducing a new product that will use the same to the one produced by Division S. An outside supplier has quoted the Division B a price of P 48 Division B would like to purchase the tools from Division S, only if an acceptable transfer pri worked out. REQUIRED: Consider the following independent cases: 1. Division S has ample idle capacity to handle all the Division B's needs: A) What is the minimum transfer price for Division S? B) What is the maximum transfer price for Division B? 2. Division S is presently selling all the tools it can produce to outside customers:

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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Find minimum, maximum and appropriate transfer price