The Trailer division of Baxter Bicycles makes bike trailers that attach to bicycles and can carry children or cargo. The trailers have a retail price of $200 each. Each trailer incurs $80 of variable manufacturing costs. The Trailer division has capacity for 40,000 trailers per year and incurs fixed costs of $1,000,000 per year. Required: 1. Assume the Assembly division of Baxter Bicycles wants to buy 15,000 trailers per year from the Trailer division. If the Trailer division can sell all of the trailers it manufactures to outside customers, what price should be used on transfers between Baxter Bicycles's divisions? 2. Assume the Trailer division currently only sells 20,000 Trailers to outside customers, and the Assembly division wants to buy 15,000 trailers per year from the Trailer division. What is the range of acceptable prices that could be used on transfers between Baxter Bicycles's divisions? 1. Transfer price per trailer 2. Transfer price per trailer will be at least but not more than
The Trailer division of Baxter Bicycles makes bike trailers that attach to bicycles and can carry children or cargo. The trailers have a retail price of $200 each. Each trailer incurs $80 of variable manufacturing costs. The Trailer division has capacity for 40,000 trailers per year and incurs fixed costs of $1,000,000 per year. Required: 1. Assume the Assembly division of Baxter Bicycles wants to buy 15,000 trailers per year from the Trailer division. If the Trailer division can sell all of the trailers it manufactures to outside customers, what price should be used on transfers between Baxter Bicycles's divisions? 2. Assume the Trailer division currently only sells 20,000 Trailers to outside customers, and the Assembly division wants to buy 15,000 trailers per year from the Trailer division. What is the range of acceptable prices that could be used on transfers between Baxter Bicycles's divisions? 1. Transfer price per trailer 2. Transfer price per trailer will be at least but not more than
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Exercise 22-20B Determining transfer prices LO C2
The Trailer division of Baxter Bicycles makes bike trailers that attach to bicycles and can carry children or cargo. The trailers have a retail price of $200 each. Each trailer incurs $80 of variable
Required:
1. Assume the Assembly division of Baxter Bicycles wants to buy 15,000 trailers per year from the Trailer division. If the Trailer division can sell all of the trailers it manufactures to outside customers, what price should be used on transfers between Baxter Bicycles's divisions?
2. Assume the Trailer division currently only sells 20,000 Trailers to outside customers, and the Assembly division wants to buy 15,000 trailers per year from the Trailer division. What is the range of acceptable prices that could be used on transfers between Baxter Bicycles's divisions?
Transcribed Image Text:Exercise 22-20B Determining transfer prices LO C2
The Trailer division of Baxter Bicycles makes bike trailers that attach to bicycles and can carry children or
cargo. The trailers have a retail price of $200 each. Each trailer incurs $80 of variable manufacturing costs.
The Trailer division has capacity for 40,000 trailers per year and incurs fixed costs of $1,000,000 per year.
Required:
1. Assume the Assembly division of Baxter Bicycles wants to buy 15,000 trailers per year from the Trailer
division. If the Trailer division can sell all of the trailers it manufactures to outside customers, what price
should be used on transfers between Baxter Bicycles's divisions?
2. Assume the Trailer division currently only sells 20,000 Trailers to outside customers, and the Assembly
division wants to buy 15,000 trailers per year from the Trailer division. What is the range of acceptable
prices that could be used on transfers between Baxter Bicycles's divisions?
1. Transfer price per trailer
2. Transfer price per trailer will be at least
but not more than
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education