NSTSYN867 Company has a Components Division which produces parts for product divisions within the company as well as for outside manufacturers. The company's Business Products Division has asked the Components Division to provide it with a new part, A15. Production data related to A15 are as follows: Units needed by Business Products Division Variable production cost Allocated fixed production cost 20,000 units $31 per unit $3.50 per unit Unfortunately, producing the new part requires the same production team within the Components Division that manufactures another part, X32, for outside customers. Data related to the production and sale of X32 to outside customers are below: Units currently produced & sold Selling price Variable production cost Variable selling cost Allocated fixed production cost 100,000 units $70.00 per unit $52.00 per unit $8.00 per unit $2.00 per unit (Baruch Q. If the NSTSYN867's Components Division must reduce the production of X32 by 18% in order to produce all of the part A15 requested by the Business Products Division, what would be the minimum transfer price they should be willing to accept assuming there would be no impact to their fixed cost? A. $ per unit

NSTSYN867 Company has a Components Division which produces parts for product divisions within the company as well as for outside manufacturers. The company's Business Products Division has asked the Components Division to provide it with a new part, A15. Production data related to A15 are as follows: Units needed by Business Products Division Variable production cost Allocated fixed production cost 20,000 units $31 per unit $3.50 per unit Unfortunately, producing the new part requires the same production team within the Components Division that manufactures another part, X32, for outside customers. Data related to the production and sale of X32 to outside customers are below: Units currently produced & sold Selling price Variable production cost Variable selling cost Allocated fixed production cost 100,000 units $70.00 per unit $52.00 per unit $8.00 per unit $2.00 per unit (Baruch Q. If the NSTSYN867's Components Division must reduce the production of X32 by 18% in order to produce all of the part A15 requested by the Business Products Division, what would be the minimum transfer price they should be willing to accept assuming there would be no impact to their fixed cost? A. $ per unit

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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