Southfield Division offers its product to outside markets for $130. It incurs variable costs of $55 per unit and fixed costs of $146,500 per month based on monthly production of 23,500 units. Northfield Division can acquire the product from an alternate supplier for $135 per unit or from Southwest Division for a transfer price of $130 plus $7 per unit in transportation costs. Required: a. What are the costs and benefits of the alternatives available to Southfield Division and Northfield Division with respect to the transfer of Southfield Division's product? Assume that Southfield Division can market all that it can produce. b. How would your answer change if Southfield Division had idle capacity sufficient to cover all of Northfield Division's needs? a. Net benefit b. Net benefit per unit per unit sell/buy externally transfer internally

Rakesh

Southfield Division offers its product to outside markets for $133. It incurs variable costs of $58 per unit and fixed costs of $148,000 per month based on monthly production of 23,800 units. Northfield Division can acquire the product from an alternate supplier for $138 per unit or from Southwest Division for a transfer price of $133 plus $9 per unit in transportation costs. Required: a. What are the costs and benefits of the alternatives available to Southfield Division and Northfield Division with respect to the transfer of Southfield Division's product? Assume that Southfield Division can market all that it can produce. b. How would your answer change if Southfield Division had idle capacity sufficient to cover all of Northfield Division's needs? a. Net benefit b. Net benefit per unit per unit

Company E has two divisions, Division A and Division B. Division A is currently buying Component X from an external seller for $12. Division B produces Component X and has excess capacity. Using the following data, what would the transfer price per unit if Division A purchased Component X from Division B at the full-cost-based transfer price? • Variable cost per unit $6.69 Fixed cost per unit 1.47 . Division B sales price of Component X 14,50

Company E has two divisions, Division A and Division B. Division A is currently buying Component X from an external seller for $12. Division B produces Component X and has excess capacity. Using the following data, what would the transfer price per unit if Division A purchased Component X from Division B at the full-cost plus assuming 19% transfer price? • Variable cost per unit $7.02 • Fixed cost per unit 1.42 • Division B sales price of Component X 14.50

Determining Market-Based and Negotiated Transfer Prices Carreker, Inc., has number of divisions, including the Alamosa Division, producer of surgical blades, and the Tavaris Division, a manufacturer of medical instruments. Alamosa Division produces a 2.7 cm steel blade that can be used by Tavaris Division in the production of scalpels. The market price of the blade is $20. Cost information for the blade is: Variable product cost $ 9.70 Fixed cost 5.20 Total product cost $14.90 Tavaris needs 17,000 units of the 2.7 cm blade per year. Alamosa Division is at full capacity (87,000 units of the blade). Required: 1. If Carreker, Inc., has a transfer pricing policy that requires transfer at market price, what would the transfer price be? 24 per unit Do you suppose that Alamosa and Tavaris divisions would choose to transfer at that price? Yes v 2. Now suppose that Carreker, Inc., allows negotiated transfer pricing and that Alamosa Division can avoid $1.55 of selling and distribution expense by…

Company E has two divisions, Division A and Division B. Division A is currently buying Component X from an external seller for $13. Division B produces Component X and has excess capacity. Using the following data, what would the transfer price per unit if Division A purchased Component X from Division B at the full-cost-based transfer price? Variable cost per unit $7.89 Fixed cost per unit 1.48 Division B sales price of Component X 14.5

General Transfer Pricing Rule Scottsdale Manufacturing is organized into two divisions:Fabrication and Assembly. Components transferred between the two divisions are recorded at a predetermined transfer price. Standard variable manufacturing cost per unit in the Fabrication Divisionis $500. At the present time, this division is working to capacity. Fabrication estimates that the unitsit produces could be sold on the external market for $650. The product under consideration is viewedas a commodity-type product, with no differentiating features or characteristics.Required1. What roles are played by transfer prices? That is, why are transfer prices needed?2. Use the general transfer pricing rule presented in the chapter to determine an appropriate transfer price.Why is the amount you calculated considered an appropriate transfer price?3. What if the Fabrication Division had excess capacity? How would this change the indicated transferprice? Why is the amount you determined considered an…

Determining Market-Based and Negotiated Transfer Prices Carreker, Inc., has a number of divisions, including the Alamosa Division, producer of surgical blades, and the Tavaris Division, a manufacturer of medical instruments. Alamosa Division produces a 2.5 cm steel blade that can be used by Tavaris Division in the production of scalpels. The market price of the blade is $25. Cost information for the blade is: Variable product cost $ 9.40 Fixed cost 5.00    Total product cost $14.40 Tavaris needs 18,000 units of the 2.5 cm blade per year. Alamosa Division is at full capacity (84,000 units of the blade). Required: 1. If Carreker, Inc., has a transfer pricing policy that requires transfer at market price, what would the transfer price be?$ fill in the blank 1per unit Do you suppose that Alamosa and Tavaris divisions would choose to transfer at that price?   2. Now suppose that Carreker, Inc., allows negotiated transfer pricing and that Alamosa Division can avoid $1.50 of selling…

Patron Bhd. is a company operating in an upstream exploration and production, focusing on the acquisition, exploration and development of properties for the production of crude oil and natural gas from underground reservoirs. The company has two divisions: Transportation and Refining. Transportation division purchases crude oil in shallow waters offshore of Peninsular Malaysia and sends it to Melaka oil refinery. Refining division processes crude oil into gasoline. The following data is available for both divisions: Transportation Division: Variable cost per barrel of crude oil RM 350.00 Fixed cost per barrel of crude oil 150.00 Total 500.00 Refining Division: RM Variable cost per barrel of gasoline 700.00 Fixed cost per barrel of gasoline Total 500.00 1,200.00 Additional information: * The company pipeline can carry 55,000 barrels per day. The external market price for supplying crude oil per barrel is RM750.00. * The Refining Division of Patron Bhd. is currently purchasing crude oil…