Transfer Pricing: Various Computations Corning Company has a decentralized organization with a divisional structure. Two of these divisions are the Appliance Division and the Manufactured Housing Division. Each divisional manager is evaluated on the basis of ROI. The Appliance Division produces a small automatic dishwasher that the Manufactured Housing Division can use in one of its models. Appliance can produce up to 26,000 of these dishwashers per year. The variable costs of manufacturing the dishwashers are $102. The Manufactured Housing Division inserts the dishwasher into the model house and then sells the manufactured house to outside customers for $72,500 each. The division's capacity is 5,460 units. The variable costs of the manufactured house (in addition to the cost of the dishwasher itself) are $43,900. Required: Assume each part is independent, unless otherwise indicated. 1. Assume that all of the dishwashers produced can be sold to external customers for $326 each. The Manufactured Housing Division wants to buy 5,460 dishwashers per year. What should the transfer price be? $ fill in the blank 1per unit
Transfer Pricing: Various Computations
Corning Company has a decentralized organization with a divisional structure. Two of these divisions are the Appliance Division and the Manufactured Housing Division. Each divisional manager is evaluated on the basis of
The Appliance Division produces a small automatic dishwasher that the Manufactured Housing Division can use in one of its models. Appliance can produce up to 26,000 of these dishwashers per year. The variable costs of manufacturing the dishwashers are $102. The Manufactured Housing Division inserts the dishwasher into the model house and then sells the manufactured house to outside customers for $72,500 each. The division's capacity is 5,460 units. The variable costs of the manufactured house (in addition to the cost of the dishwasher itself) are $43,900.
Required:
Assume each part is independent, unless otherwise indicated.
1. Assume that all of the dishwashers produced can be sold to external customers for $326 each. The Manufactured Housing Division wants to buy 5,460 dishwashers per year. What should the transfer price be?
$ fill in the blank 1per unit
2. Refer to Requirement 1. Assume $20 of avoidable distribution costs. Identify the maximum and minimum transfer prices.
| Maximum | $ fill in the blank per unit |
| Minimum | $ fill in the blank per unit |
Identify the actual transfer price, assuming that negotiation splits the difference.
$ fill in the blank per unit
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