Required information[The following information applies to the questions displayed below.]In each of the cases below, assume Division X has a product that can be sold to outside customers or toDivision Y of the same company. The managers of the divisions are evaluated based on their divisionalprofits.CaseABDivision X:Capacity in units103,000109,000Number of units being sold to outside customersSelling price per unit to outside customers103,00087,000$ 58$ 34Variable costs per unit$ 24$ 11Fixed costs per unit (based on capacity)$ 9$ 6Division Y:Number of units needed for production22,00022,000Purchase price per unit now being paid to an outsidesupplier$ 54$ 22Required:2. Refer to the data in case B above. In this case, there will be no savings in variable selling costs on intracompany sales.a. What is the lowest acceptable transfer price from the perspective of the selling division?b. What is the highest acceptable transfer price from the perspective of the buying division?c. What is the range of acceptable transfer prices (if any) between the two divisions? If the managers are free to negotiate andmake decisions on their own, will a transfer probably take place?

Step 1:1. We can determine the lowest acceptable transfer price as follows:As given, there will be…

Answered: Required information [The following…

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter14: Decentralized Operations

Section: Chapter Questions

Problem 14.16E

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In each of the cases below, assume Division X has a product that can be sold either to outside customers or to Division Y of the same company for use in its production process. The managers of the divisions are evaluated based on their divisional profits. Division X: Capacity in units Number of units being sold to outside customers Selling price per unit to outside customers Variable costs per unit Fixed costs per unit (based on capacity) Division Y: Number of units needed for production Purchase price per unit now being paid to an outside supplier Exercise 11-13 (Algo) Part 1 Complete this question by entering your answers in the tabs below. Req 1A A Req 1B Case Req 1C 110,000 110,000 $50 $25 $ 8 24,000 $43 Required: 1. Refer to the data in case A above. Assume in this case that $2 per unit in variable selling costs can be avoided on intracompany sales. B 107,000 83,000 $28 $19 $5 a. What is the lowest acceptable transfer price from the perspective of the selling division? b. What is…
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[The following information applies to the questions displayed below.) In each of the cases below, assume Division X has a product that can be sold to outside customers or to Division Y of the same company. The managers of the divisions are evaluated based on their divisional profits. Case A B Division X: Capacity in units 106,000 Variable costs per unit Number of units being sold to outside customers Selling price per unit to outside customers 95,000 106,000 72,000 $ 58 $ 26 $ 24 $ 16 Fixed costs per unit (based on capacity) $ 8 $ 4 Division Y: Number of units needed for production 23,000 23,000 Purchase price per unit now being paid to an outside supplier $ 52 $ 32 Exercise 11-13 (Algo) Part 1 Required: 1. Refer to the data in case A above. Assume in this case $2 per unit in variable selling costs can be avoided on intracompany sales. a. What is the lowest acceptable transfer price from the perspective of the selling division? b. What is the highest acceptable transfer price from the…
Ll.42.
n each of the cases below, assume that Division X has a product that can be sold either to outside customers or to Division Y of the same company for use in its production process. The managers of the divisions are evaluated based on their divisional profits: Case A B Division X: Capacity in units 140,000 140,000 Number of units being sold to outside customers 140,000 115,000 Selling price per unit to outside customers $ 54 $ 38 Variable costs per unit $ 34 $ 20 Fixed costs per unit (based on capacity) $ 12 $ 10 Division Y: Number of units needed for production 25,000 25,000 Purchase price per unit now being paid to an outside supplier $ 50 $ 37 Required:1-a. Refer to the data in case A above. Assume that $3 per unit in variable selling costs can be avoided on intracompany sales. Determine the transfer price of the selling division. 1-b. If the managers are free to negotiate and make decisions on their own, will…
In each of the cases below, assume Division X has a product that can be sold either to outside customers or to Division Y of the same company for use in its production process. The managers of the divisions are evaluated based on their divisional profits. Case A B Division X: Capacity in units 200,000 200,000 Number of units being sold to outside customers 200,000 160,000 Selling price per unit to outside customers $ 90 $ 75 Variable costs per unit $ 70 $ 60 Fixed costs per unit (based on capacity) $ 13 $ 8 Division Y: Number of units needed for production 40,000 40,000 Purchase price per unit now being paid to an outside supplier $ 86 $ 74 Exercise 11-13 (Static) Part 2 Required:2. Refer to the data in case B above. In this case, there will be no savings in variable selling costs on intracompany sales. a. What is the lowest acceptable transfer price from the perspective of the selling division? b. What is the highest acceptable transfer…
In each of the cases below, assume that Division X has a product that can be sold either to outside customers or to Division Y of the same company for use in its production process. The managers of the divisions are evaluated based on their divisional profits: Case A B Division X: Capacity in units 100,000 100,000 Number of units being sold to outside customers 100,000 80,000 Selling price per unit to outside customers $50 $35 Variable costs per unit $30 $20 Fixed costs per unit (based on capacity) $8 $6 Division Y: Number of units needed for production 20,000 20,000 Purchase price per unit now being paid to an outside supplier $47 $34 Required:1-a. Refer to the data in case A above. Assume that $2 per unit in variable selling costs can be avoided on intracompany sales. Determine the transfer price of the selling division. 1-b. If the managers are free to negotiate and make decisions on their own, will a transfer take place? multiple…
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Jj.171.
Assume that Division A has a product that can be sold either to Division B of the same company or to outside customers. The managers of both divisions are evaluated based on their own division's return on investment (ROI). The managers are free to decide if they will participate in any internal transfers. All transfer prices are negotiated. Division A: Capacity in units = 300,000 Number of units now being sold to outside customers = 300,000 Selling price per unit on the outside market = $41 Variable costs per unit = $19 Fixed costs per unit (based on capacity) = 12 Division B: Number of units needed annually = 100,000 Purchase price now being paid to an outside supplier = $38 Assume that Division A can avoid $6 per unit in variable costs on any sales to Division B. Which one of the following statements is most correct regarding the division managers' response to the opportunity for the internal transfer? the managers will not agree to a transfer the managers will agree to a transfer at…
Hi, I also need help finding the lowest acceptable transfer price as well as the highest acceptable transfer price. thanks
Assume that Steel Division has a product that can be sold either to outside customers on an intermediate market or to Fabrication Division of the same company for use in its production process. The different divisions are evaluated based on their divisional profits. Steel Division:Capacity in units 200,000No. of units being sold on the intermediate market 200,000Selling price per unit on the intermediate market P90Variable cost per unit inclusive of variable selling expense of P370Fixed cost per unit (based on capacity) 13 Fabrication Division:No. of units needed for production 40,000 Purchase price per unit now being paid to as outside supplier…

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