Required information[The following information applies to the questions displayed below.]Oxford Company has two divisions. Thames Division, which has an Investment base of $80,200,000,produces and sells 1,050,000 units of a product at a market price of $141 per unit. Its variable costs total$39 per unit. The division also charges each unit $70 of fixed costs based on a capacity of 1,100,000units.Lakes Division wants to purchase 240,000 units from Thames. However, it is willing to pay only $135 perunit because it has an opportunity to accept a special order at a reduced price. The order iseconomically justifiable only if Lakes can acquire Thames' output at a reduced price.Required:a. What is the ROI for Thames without the transfer to Lakes? (Round your answer to 2 decimal places.)b. What is Thames ROI If It transfers 240,000 units to Lakes at $135 each? (Round your answer to 2 decimal places.)c. What is the minimum transfer price for the 240,000-unit order that Thames would accept if it were willing to maintain thesame ROI with the transfer as it would accept by selling its 1,050,000 units to the outside market? (Round your answer to2 decimal places.)a.ROIb. ROIC.Minimum transfer priceper unit

Return on investment means the amount of return earned by the entity on the invested assets. In…

Answered: Oxford Company has two divisions.…

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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