Two possible transfer prices (for 4,000 units) are under consideration by two divisions: P35, the minimum transfer price and P40, the maximum transfer price. Corporate profits would be ______________ if P35 is selected as the transfer price rather than P40, and the Computer Division purchases from the Computer Chip Division instead of from the external supplier a.40,000 larger b.20,000 larger c. the same d. 20,000 smaller

Two possible transfer prices (for 4,000 units) are under consideration by two divisions: P35, the minimum transfer price and P40, the maximum transfer price. Corporate profits would be ______________ if P35 is selected as the transfer price rather than P40, and the Computer Division purchases from the Computer Chip Division instead of from the external supplier a.40,000 larger b.20,000 larger c. the same d. 20,000 smaller

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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_____ 1. If Moonton Company instructed Northern Vale Division to supply Iron Hooks to Mooniyan Division, how much is the maximum transfer price that they can consider? (Round off your final answer to 3 decimal places)_____ 2. Continuing from Question No.1, how much is the minimum transfer price that they can consider? (Round off your final answer to 3 decimal places)
Use the information for Desks Unlimited above with the following changes:1. The Computer Desk Division is able to sell at full capacity (15,000 units).2. If there is a transfer between the divisions, the Computer Desk Division will save $50 per unit in Variable Marketing and Shipping costs.Answer the following questions. Show your work and clearly label your answers. a. What is the appropriate Transfer Price range?b. If a transfer is made for $460 per desk, how much better of worse off is the firm?
General guideline, transfer pricing. The Slate Company manufactures and sells television sets. Its assembly division (AD) buys television screens from the screen division (SD) and assembles the TV sets. The SD, which is operating at capacity,incurs an incremental manufacturing cost of $65 per screen. The SD can sell all its output to the outside market at a priceof $100 per screen, after incurring a variable marketing and distribution cost of $8 per screen. If the AD purchases screens from outside suppliers at a price of $100 per screen, it will incur a variable purchasing cost of $7 per screen. Slate’s division managers can act autonomously to maximize their own division’s operating income.1. What is the minimum transfer price at which the SD manager would be willing to sell screens to the AD?2. What is the maximum transfer price at which the AD manager would be willing to purchase screens from the SD?3. Now suppose that the SD can sell only 70% of its output capacity of 20,000…
Required information [The following information applies to the questions displayed below.] Illinois Metallurgy Corporation has two divisions. The Fabrication Division transfers partially completed components to the Assembly Division at a predetermined transfer price. The Fabrication Division's standard variable production cost per unit is $550. The division has no excess capacity, and it could sell all of its components to outside buyers at $770 per unit in a perfectly competitive market. Required: 1. Determine a transfer price using the general rule. Transfer price
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4. If a transfer price of $340 per unit is negotiated, how much would the income from operations of each division and total company income from operations increase? The Semiconductors Division's income from operations would increase by$fill in the blank 75932002afef041_1 The Navigational Systems Division's income from operations would increase by$fill in the blank 75932002afef041_2 Exoplex Industries Inc.'s total income from operations would increase by$fill in the blank 75932002afef041_3 5a. What is the range of possible negotiated transfer prices that would be acceptable for Exoplex Industries Inc.? Any transfer price than the Semiconductors Division’s variable expenses per unit but than the market price would be acceptable. 5b. Assuming that the managers of the two divisions cannot agree on a transfer price, what price would you suggest as the transfer price?$fill in the blank 75932002afef041_6
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Calculating Transfer Price Burt Inc. has a number of divisions, including the Indian Division, a producer of liquid pumps, and Maple Division, a manufacturer of boat engines. Indian Division produces the h20-model pump that can be used by Maple Division in the production of motors that regulate the raising and lowering of the boat engir stern drive unit. The market price of the h20-model is $724, and the full cost of the h20-model is $540. Required: 1. If Burt has a transfer pricing policy that requires transfer at full cost: What will the transfer price be? $ Do you suppose that Indian and Maple divisions will choose to transfer at that price? Maple Division Indian Division 2. If Burt has a transfer pricing policy that requires transfer at market price: What would the transfer price be? $ Do you suppose that Indian and Maple divisions would choose to transfer at that price? Maple Division Indian Division 3. Now suppose that Burt allows negotiated transfer pricing and that Indian…
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