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Montana oversees the Coffee Bean Division at the Sarasota Corp, and she is evaluating different options for the sale of the company's beans. In the past, the Coffee Bean Division has been selling to external customers only, and has been operating at full capacity. As the business grew and expanded, so did its production capacity. It is now operating with some idle capacity, and has been debating whether to sell internally to another business unit. The Coffee Maker Division has recently decided that it will be giving away a free pound of coffee with each brewer machine purchase. It anticipates needing 14,300 pounds of coffee in the coming year and is obtaining quotes both internally and externally. The Coffee Bean Division has a capacity of 177,000 pounds of coffee and reported the following for its external sales: 162,200 pounds resulting in sales of $204,300, variable costs of $123,272, and fixed costs of $54,300. An external vendor has offered the Coffee Maker Division the following prices: $1.40 for the first 5,000 pounds, $1.20 for the next 5,000 pounds, and $1.00 for any number of pounds above this, with an additional markup of 5% of the total. The Coffee Maker Division is evaluating its choices, and Montana is hopeful it will have the most appealing offer. (a) What is the minimum acceptable transfer price for the Coffee Maker Division's internal purchase from the Coffee Bean Division? What is the overall price that would be quoted? (Round per pound answer to 2 decimal places, eg. $15.25.) acceptable transfer price is $ per pound, and the overall price quoted is $

Montana oversees the Coffee Bean Division at the Sarasota Corp, and she is evaluating different options for the sale of the company's beans. In the past, the Coffee Bean Division has been selling to external customers only, and has been operating at full capacity. As the business grew and expanded, so did its production capacity. It is now operating with some idle capacity, and has been debating whether to sell internally to another business unit. The Coffee Maker Division has recently decided that it will be giving away a free pound of coffee with each brewer machine purchase. It anticipates needing 14,300 pounds of coffee in the coming year and is obtaining quotes both internally and externally. The Coffee Bean Division has a capacity of 177,000 pounds of coffee and reported the following for its external sales: 162,200 pounds resulting in sales of $204,300, variable costs of $123,272, and fixed costs of $54,300. An external vendor has offered the Coffee Maker Division the following prices: $1.40 for the first 5,000 pounds, $1.20 for the next 5,000 pounds, and $1.00 for any number of pounds above this, with an additional markup of 5% of the total. The Coffee Maker Division is evaluating its choices, and Montana is hopeful it will have the most appealing offer. (a) What is the minimum acceptable transfer price for the Coffee Maker Division's internal purchase from the Coffee Bean Division? What is the overall price that would be quoted? (Round per pound answer to 2 decimal places, eg. $15.25.) acceptable transfer price is $ per pound, and the overall price quoted is $

Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter12: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 2CDQ
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Montana oversees the Coffee Bean Division at the Sarasota Corp, and she is evaluating different options for the sale of the company's beans. In the past, the Coffee Bean Division has been selling to external customers only, and has been operating at full capacity. As the business grew and expanded, so did its production capacity. It is now operating with some idle capacity, and has been debating whether to sell internally to another business unit. The Coffee Maker Division has recently decided that it will be giving away a free pound of coffee with each brewer machine purchase. It anticipates needing 14,300 pounds of coffee in the coming year and is obtaining quotes both internally and externally. The Coffee Bean Division has a capacity of 177,000 pounds of coffee and reported the following for its external sales: 162,200 pounds resulting in sales of $204,300, variable costs of $123,272, and fixed costs of $54,300. An external vendor has offered the Coffee Maker Division the following prices: $1.40 for the first 5,000 pounds, $1.20 for the next 5,000 pounds, and $1.00 for any number of pounds above this, with an additional markup of 5% of the total. The Coffee Maker Division is evaluating its choices, and Montana is hopeful it will have the most appealing offer. (a) What is the minimum acceptable transfer price for the Coffee Maker Division's internal purchase from the Coffee Bean Division? What is the overall price that would be quoted? (Round per pound answer to 2 decimal places, eg. $15.25.) acceptable transfer price is $ per pound, and the overall price quoted is $
Transcribed Image Text:Montana oversees the Coffee Bean Division at the Sarasota Corp, and she is evaluating different options for the sale of the company's beans. In the past, the Coffee Bean Division has been selling to external customers only, and has been operating at full capacity. As the business grew and expanded, so did its production capacity. It is now operating with some idle capacity, and has been debating whether to sell internally to another business unit. The Coffee Maker Division has recently decided that it will be giving away a free pound of coffee with each brewer machine purchase. It anticipates needing 14,300 pounds of coffee in the coming year and is obtaining quotes both internally and externally. The Coffee Bean Division has a capacity of 177,000 pounds of coffee and reported the following for its external sales: 162,200 pounds resulting in sales of $204,300, variable costs of $123,272, and fixed costs of $54,300. An external vendor has offered the Coffee Maker Division the following prices: $1.40 for the first 5,000 pounds, $1.20 for the next 5,000 pounds, and $1.00 for any number of pounds above this, with an additional markup of 5% of the total. The Coffee Maker Division is evaluating its choices, and Montana is hopeful it will have the most appealing offer. (a) What is the minimum acceptable transfer price for the Coffee Maker Division's internal purchase from the Coffee Bean Division? What is the overall price that would be quoted? (Round per pound answer to 2 decimal places, eg. $15.25.) acceptable transfer price is $ per pound, and the overall price quoted is $
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