The Gear Division of Bicycle Bob produces a 12-speed gear that it sells to its customers for $29 per unit. Its unit variable cost is $4.80, and its unit fixed cost is $3.75. Top management of Bicycle Bob would like the Gear Division to transfer 4,000 gears to another division within the company at a price of $27. The Gear Division has no excess capacity to provide the units. What is the minimum transfer price that the Gear Division should accept? (Round answer to 2 decimal places (e.g., 52.75).) Minimum transfer price per unit $

The Gear Division of Bicycle Bob produces a 12-speed gear that it sells to its customers for $29 per unit. Its unit variable cost is $4.80, and its unit fixed cost is $3.75. Top management of Bicycle Bob would like the Gear Division to transfer 4,000 gears to another division within the company at a price of $27. The Gear Division has no excess capacity to provide the units. What is the minimum transfer price that the Gear Division should accept? (Round answer to 2 decimal places (e.g., 52.75).) Minimum transfer price per unit $

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 17E: Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside...

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Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside suppliers at a cost of 1,350 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 900 per unit. a. If a transfer price of 1,000 per unit is established and 75,000 units of materials are transferred, with no reduction in the Components Divisions current sales, how much would Ziegler Inc.s total operating income increase? b. How much would the Instrument Divisions operating income increase? c. How much would the Components Divisions operating income increase?
Oat Treats manufactures various types of cereal bars featuring oats. Simmons Cereal Company has approached Oat Treats with a proposal to sell the company its top selling oat cereal bar at a price of $27,500 for 20,000 bars. The costs shown are associated with production of 20,000 oat bars currently. The manufacturing overhead consists of $3,000 of variable costs with the balance being allocated to fixed costs. Should Oat Treats make or buy the oat bars?
Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all 30,000 for $240 each. Country Enterprises has approached Dimitri to buy 800 chairs for $210 each. Dimitris normal variable cost is $165 per chair, including $50 per unit in direct labor per chair. Dimitri can produce the special order on an overtime shift, which means that direct labor would be paid overtime at 150% of the normal pay rate. The annual fixed costs will be unaffected by the special order and the contract will not disrupt any of Dimitris other operations. What will be the impact on profits of accepting the order?
Reubens Deli currently makes rolls for deli sandwiches it produces. It uses 30,000 rolls annually in the production of deli sandwiches. The costs to make the rolls are: A potential supplier has offered to sell Reuben the rolls for $0.90 each. If the rolls are purchased, 30% of the fixed overhead could be avoided, If Reuben accepts the offer, what will the effect on profit be?
The clock division of Control Central Corporation manufactures clocks and then sells them to customers for $10 per unit. Its variable cost is $4 per unit, and its fixed cost per unit is $2.50. Management would like the clock division to transfer 8.000 of these clocks to another division within the company at a price of $5. The clock division could avoid $0.50 per clock variable packaging costs by selling internally. Required:a. Determine the minimum transfer price, assuming the clock division is not operating at full capacity and what is your interpretation of these results?b. Determine the minimum transfer price, assuming the clock division is operating at full capacity and what is your interpretation of these results?c. Why transfer pricing policy can be interpreted negatively and positively? Give an explanation!
Holiday Corp. has two divisions, Quail and Marlin. Quail produces a widget that Marlun could use in its production. Quail's variable costs are $5.80 per widget while the full cost is $8.80. Widgets sell on the open market for $15.6 each. If Quail has excess capacity, what would be the minimum transfer price if Marlin is purchasing 190000 units on the open market? a) $5.8 b) $8.8 c) $15.6 d) $6.8
The Windshield division of Fast Car Co. makes windshields for use in Fast Car’s Assembly division. The Windshield division incurs variable costs of $200 per windshield and has capacity to make 500,000 windshields per year. The market price is $450 per windshield. The Windshield division incurs total fixed costs of $3,000,000 per year. If the Windshield division has excess capacity, what is the range of possible transfer prices that could be used on transfers between the Windshield and Assembly divisions?
The Heating Division of Swifty International produces a heating element that it sells to its customers for $38 per unit. Its unit variable cost is $23, and its unit fixed cost is $8. Top management of Swifty International would like the Heating Division to transfer 15,400 heating units to another division within the company at a price of $31. The Heating Division is operating at full capacity. What is the minimum transfer price that the Heating Division should accept? Minimum transfer price 23
Rakesh
Holiday Corporation has two divisions, Quail and Marlin. Quail produces a widget that Marlin could use in its production. Quail's variable costs are $4.30 per widget while the full cost is $7.30. Widgets sell on the open market for $12.60 each. If Quail has excess capacity, what would be the minimum transfer price if Marlin currently is purchasing 115,000 units on the open market? Multiple Choice $5.30 $4.30 $12.60 $7.30
The Wood Division of Wildhorse Products Inc. manufactures wood mouldings and sells them externally for $200. Its variable cost is $58 per unit, and its fixed cost per unit is $13. v's president wants the Wood Division to transfer 4900units to another company division at a price of $71. Assuming the Wood Division does not have any available capacity, the minimum transfer price it should accept is $13. $71. $58. $200.
The Wood Division of Vaughn Manufacturing manufactures rubber moldings and sells them externally for $45. Its variable cost is $25 per unit, and its fixed cost per unit is $8. Vaughn’s president wants the Wood Division to transfer 4300 units to another company division at a price of $21.Assuming the Wood Division does not have any available capacity, the minimum transfer price it should accept is $45. $25. $21. $8.