Your Division makes a part that can either be sold to outside customers or transferred internally to Division Competitor for further processing. Annual data relating to this part are as follows:Annual production capacity80.000unitsDemand70,000unitsSelling price of the item to outside customers..$35Variable cost per unit$23Fixed cost per unit$5Division Competitor requires 5,000 units per year and is currently paying an outside supplier $33 per unit.the other division?If the transfer is made, $3 per unit of variable costs can be saved. What is the lowest acceptable transfer price from the viewpoint of the selling division for each of the 15,000 units needed byO $35O $32O $20O $25O $23

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pur Division makes a part that can either be sold to outside customers or transferred internally to Division Competitor for further processing. Annual data relating to this part are as follows: Annual production capacity 80.000units Demand 70.000units Selling price of the item to outside customers $35 Variable cost per unit $23 Fixed cost per unit $5 vision Competitor requires 5,000 units per year and is currently paying an outside supplier $33 per unit. e other division? If the transfer is made, $3 per unit of variable costs can be saved. What is the lowest acceptable transfer price from the viewpoint of the selling division for each of the 15,000 units needed by D 35 D $32 O s20 O $25 O $23

pur Division makes a part that can either be sold to outside customers or transferred internally to Division Competitor for further processing. Annual data relating to this part are as follows: Annual production capacity 80.000units Demand 70.000units Selling price of the item to outside customers $35 Variable cost per unit $23 Fixed cost per unit $5 vision Competitor requires 5,000 units per year and is currently paying an outside supplier $33 per unit. e other division? If the transfer is made, $3 per unit of variable costs can be saved. What is the lowest acceptable transfer price from the viewpoint of the selling division for each of the 15,000 units needed by D 35 D $32 O s20 O $25 O $23

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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Division A produces a product that it sells to the outside market. It has compiled the following: Variable manufacturing cost per unit $8 Variable selling costs per unit $3 Total fixed manufacturing costs $164000 Total fixed selling costs $30000 Per unit selling price to outside buyers $56 Capacity in units per year 30000 Division B of the same company is currently buying an identical product from an outside provider for $54 per unit. It wishes to purchase 5200 units per year from Division A. Division A is currently selling 24800 units of the product per year. If the internal transfer is made, Division A will not incur any selling costs. What would be the maximum transfer price per unit that Division B would be willing to accept? $56 $9 $54 $8
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Materials used by the Instrument Division of T_Kong Industries are currently purchased from outside suppliers at a cost of $175 per unit. However, the same materials are available from the Components Division. The Components Division has unused capacity and can produce the materials needed by the Instrument Division at a variable cost of $122 per unit. a. If a transfer price of $148 per unit is established and 50,000 units of materials are transferred, with no reduction in the Components Division’s current sales, how much would T_Kong Industries’ total income from operations increase? b. How much would the Instrument Division's income from operations increase? c. How much would the Components Division's income from operations increase?
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MAYAR Corporation produces XY product. The selling price for XY product is $250.MAYAR produces and sells 5,600 of XY per year. Cost data are as follows:Variable manufacturing $115 per unitVariable selling andadministrative $16 per unitFixed manufacturing $290,000 per yearFixed selling and administrative $150,000 per yearA potential deal has come up for a one-time sale of 32 units at a special price of $120 perunit. The marketing manager states that the sale will not negatively impact the company'sregular sales activities and will require the normal variable manufacturing costs andselling and administrative costs. The production manager states that there is plenty ofexcess capacity and the deal will not impact fixed costs. The controller points out,however, that because the expected increase in revenues are equal to the expectedincrease in costs to fill the order, the deal will not have any impact on the bottom line.Required: Prepare differential analysis to decide whether the company…
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