The Southern Division of Barstol Company makes and sells a single product, which is a part used in manufacturing trucks. The annual production capacity is 31,000 units and the variable cost of each unit is $48. Presently the Southern Division sells 29,000 units per year to outside customers at $60 per unit. The Northern Division of Barstol Company would like to buy 16,000 units a year from Southern to use in its production. There would be no savings in variable costs from transferring the units internally rather than selling them externally. The lowest acceptable transfer price from the standpoint of the Southern Division should be closest to: Multiple Choice $48.00 per unit $58.50 per unit $22.50 per unit $60.00 per unit
The Southern Division of Barstol Company makes and sells a single product, which is a part used in manufacturing trucks. The annual production capacity is 31,000 units and the variable cost of each unit is $48. Presently the Southern Division sells 29,000 units per year to outside customers at $60 per unit. The Northern Division of Barstol Company would like to buy 16,000 units a year from Southern to use in its production. There would be no savings in variable costs from transferring the units internally rather than selling them externally. The lowest acceptable transfer price from the standpoint of the Southern Division should be closest to: Multiple Choice $48.00 per unit $58.50 per unit $22.50 per unit $60.00 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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The Southern Division of Barstol Company makes and sells a single product, which is a part used in manufacturing trucks. The annual production capacity is 31,000 units and the variable cost of each unit is $48. Presently the Southern Division sells 29,000 units per year to outside customers at $60 per unit. The Northern Division of Barstol Company would like to buy 16,000 units a year from Southern to use in its production. There would be no savings in variable costs from transferring the units internally rather than selling them externally. The lowest acceptable transfer price from the standpoint of the Southern Division should be closest to:
Multiple Choice
-
$48.00 per unit
-
$58.50 per unit
-
$22.50 per unit
-
$60.00 per unit
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