The machining division is currently selling 2,080 units to outside customers, and the assembly division of Sandhill International wants to purchase 400 units from machining. If the transaction takes place, the variable selling costs per unit on the units transferred to assembly will be $0/unit, and not $4/unit. What should be the transfer price in order not to affect the machining division's current profit? (Round answer to 2 decimal places eg. 5.25.) Minimum transfer price

The machining division is currently selling 2,080 units to outside customers, and the assembly division of Sandhill International wants to purchase 400 units from machining. If the transaction takes place, the variable selling costs per unit on the units transferred to assembly will be $0/unit, and not $4/unit. What should be the transfer price in order not to affect the machining division's current profit? (Round answer to 2 decimal places eg. 5.25.) Minimum transfer price

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Samsung manufacturers USB charging cables for mobile devices. It sells these cables to distributors for $2.6000000000 each, while their variable costs are 72e per cable, and they have a fixed cost of $43000 to manufacture the cables. 1. What is the Contribution margin (in dollars)? 2. What is the profit function (without units using x as the number of cables sold)? 3. What is their projected profit or loss next month (in dollars), for which Samsung forecasts sales of 23241 cables? 4. What is the break even volume (without units)? For parts 1, 2, and 3, answer to the nearest cent. For part 4, answer to one decimal place (don't round up to the nearest whole unit). Answer: 1. Contribution margin = 2. Profit function: Profit= 3. Profit or loss = 4. Break even volume =
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
Company E has two divisions, Division A and Division B. Division A is currently buying Component X from an external seller for $14. 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 15% transfer price? Variable cost per unit $7.16 Fixed cost per unit 1.14 Division B sales price of Component X 14.5
XYZ company currently sells 15,000 units a month for $50 each, has variable costs of $10 per unit, and fixed costs of $300,000. The company is considering increasing the price of its units to $60 per unit. If the price is changed, how many units will the company need to sell for profit to remain the same as before the price change? Select one: O a. None of the given answers. O b. 7,500 O c. 11,250 O d. 9,000 O e. 12,000
Diversity Ltd. produces and sells a product called Star. The company is currently selling 9,560 units of the product which represent £143,400. Total fixed costs equal £66,920 and total contribution equals £66,920. Required: Considering this information, is Diversity Ltd. selling a profitable amount of its product Star and which would be your advice for the company? Which is the price per unit at which Diversity Ltd. is selling its product? Explain your answer in detail. Consider that, after an increase in the market demand of product Star, Diversity Ltd. sells 25% more units of product Star. In this new situation, is Diversity Ltd. selling a profitable amount of its product Star? Explain your answer in detail. Draw a graph related to your previous answers in a) and b). Consider the information from the graph, which would be the financial situation of Diversity Ltd. if sales decrease in more than 25%?
Diversity Ltd. produces and sells a product called Star. The company is currently selling 9,560 units of the product which represent £143,400. Total fixed costs equal £66,920 and total contribution equals £66,920. Required: Considering this information, is Diversity Ltd. selling a profitable amount of its product Star and which would be your advice for the company? Which is the price per unit at which Diversity Ltd. is selling its product? Explain your answer in detail.Consider that, after an increase in the market demand of product Star, Diversity Ltd. sells 25% more units of product Star. In this new situation, is Diversity Ltd. selling a profitable amount of its product Star? Explain your answer in detail.Draw a graph related to your previous answers in a) and b). Consider the information from the graph, which would be the financial situation of Diversity Ltd. if sales decrease in more than 25%?
Charlevoix Cases makes mobile phone cases. The company has collected the following price and cost characteristics: Sales price $ 12.00 per case Variable costs 5.50 per case Fixed costs 403,000 per year Assume that the company plans to sell 77,000 units annually. Consider requirements (b), (c), and (d) independently of each other. Required: What will be the operating profit? What is the impact on operating profit if the sales price decreases by 20 percent? Increases by 10 percent? Note: Do not round intermediate calculations. What is the impact on operating profit if variable costs per unit decrease by 20 percent? Increase by 10 percent? Note: Do not round intermediate calculations. Suppose that fixed costs for the year are 20 percent lower than projected and variable costs per unit are 20 percent higher than projected. What impact will these cost changes have on operating profit for the year? Will profit go up? Down? By how much? Note: Do not round intermediate…
The Selling Division’s unit sales price is P20 and its unit variable cost is P10. Its capacity is 10,000 units. Fixed costs per unit are P4. Current outside sales is 7,500 units. What is the maximum transfer price that the Purchasing Division would be willing to accept if 4,000 units will be sold to the Purchasing Division? Assume that the Purchasing Division can buy the same from outside market at P18.50 and that a cost of P1 per unit will be saved from the transfer. _____________________5. The Selling Division’s unit sales price is P20 and its unit variable cost is P10. Its capacity is 10,000 units. Fixed costs per unit are P4. Current outside sales is 10,000 units. What is the maximum transfer price that the Purchasing Division would be willing to accept if 4,000 units will be sold to the Purchasing Division? Assume that the Purchasing Division can buy the same from outside market at P18.50. _____________________6. The Selling Division’s unit sales price is P19 and its unit variable…
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 market-based transfer price? • Variable cost per unit $10 • Fixed cost per unit 1.16 • Division B sales price of Component X 14.50
Kerrigan Ltd makes and sells product A. The current selling price is £11 and the total of variable costs per unit is £6. The fixed costs of production are £350,000 and the company currently sells 75,000 units. Required: (a) Calculate the break-even point (in units and revenues) of product A for Kerrigan Ltd. ] (b) Calculate the profit made on sales of 75,000 units. [] (c) The company will make an advertising campaign costs £10,000 and will improve the product specifications, which will increase the variable cost per unit by £1. This is expected to allow the company to increase the selling price to £13 and the sales is expected to be 80,000 unites. Calculate the new profit figure for the improved product.