Ute Semi-Conductor Company Problem #1 Ute Semi-conductor superchips superchips External market Superchip Variable cost $230 Selling price $400 Market Demand 20,000 Hours/unit to produce 4 Max 25K Ute Mini-computer Production capacity of semi-conductor = 100,000 hours Ute has a 100% owned subsidiary that wants to purchase super chips. What should Ute establish as the Transfer Price Poicy under the Optimum Transfer Pricing method? 2

Ute Semi-Conductor Company Problem #1 Ute Semi-conductor superchips superchips External market Superchip Variable cost $230 Selling price $400 Market Demand 20,000 Hours/unit to produce 4 Max 25K Ute Mini-computer Production capacity of semi-conductor = 100,000 hours Ute has a 100% owned subsidiary that wants to purchase super chips. What should Ute establish as the Transfer Price Poicy under the Optimum Transfer Pricing method? 2

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing

Section: Chapter Questions

Problem 5CE

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Kimmel, Accounting, 7e Help | System Announcements CALCULATOR PRINTER VERSION 1 BACK NEXT Exercise 21-16 Crede Inc. has two divisions. Division A makes and sells student desks. Division B manufactures and sells reading lamps. Each desk has a reading lamp as one of its components. Division A can purchase reading lamps at a cost of $11 from an outside vendor. Division A needs 9,300 lamps for the coming year. Division B has the capacity to manufacture 46,700 lamps annually. Sales to outside customers are estimated at 37,400 lamps for the next year. Reading lamps are sold at $11 each. Variable costs are $7 per lamp and include $1 of variable sales costs that are not incurred if lamps are sold internally to Division A. The total amount of fixed costs for Division B is $72,300. Consider the following independent situations. What should be the minimum transfer price accepted by Division B for the 9,300 lamps and the maximum transfer price paid by Division A? Minimum transfer price accepted by…
Exercise 11-3 (Algo) Transfer Pricing Basics [LO11-3] Sako Company’s Audio Division produces a speaker that is used by manufacturers of various audio products. Sales and cost data on the speaker follow: Selling price per unit on the intermediate market $ 120 Variable costs per unit $ 102 Fixed costs per unit (based on capacity) $ 8 Capacity in units 25,000 Sako Company has a Hi-Fi Division that could use this speaker in one of its products. The Hi-Fi Division will need 5,000 speakers per year. It has received a quote of $117 per speaker from another manufacturer. Sako Company evaluates division managers on the basis of divisional profits. Required: 1. Assume the Audio Division sells only 20,000 speakers per year to outside customers. a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hi-Fi Division? b. From the standpoint of the Hi-Fi Division, what is the highest acceptable transfer price for speakers…
Exercise 11-3 (Algo) Transfer Pricing Basics [LO11-3] Sako Company’s Audio Division produces a speaker that is used by manufacturers of various audio products. Sales and cost data on the speaker follow: Selling price per unit on the intermediate market $ 120 Variable costs per unit $ 102 Fixed costs per unit (based on capacity) $ 8 Capacity in units 25,000 Sako Company has a Hi-Fi Division that could use this speaker in one of its products. The Hi-Fi Division will need 5,000 speakers per year. It has received a quote of $117 per speaker from another manufacturer. Sako Company evaluates division managers on the basis of divisional profits. Required: 1. Assume the Audio Division sells only 20,000 speakers per year to outside customers. a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hi-Fi Division? b. From the standpoint of the Hi-Fi Division, what is the highest acceptable transfer price for speakers…
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3. CVP: Atlas Corp, has been asked to submit a bid on supplying underwater masks to Pandora. The company's current cost structure per mask is as follows: DM DL var. MOH var. SGA $9.00 $8.00 $7.50 $4.00 a. Assume that there would be no variable sales commission on this special order. Determine the lowest unit price that Atlas can bid without reducing its current level of operating income. b. Assume the company desires a 38 percent contribution margin ratio from this sale and that a special sales commission of 4 percent of the bid price will be applied to the order instead of its normal $4 variable sales commission. Determine the bid price per unit given these unique circumstances. c. Assume the product fixed costs are $180,000. How many units need to be sold to attain a profit of $249,000?
Buy P 1-P Low Cost High Cost Purchase Cost C1 = 35,000+ 0.08 x 2,500,000 C2 = 35,000+ 0.12 x 2,500,000 C3 = 200,000
Identify Breakeven in units for the scenario below: $170.000 $136.000 $102.000 $68.000 $34.000 GOOO 3000 2500 4000 Unit Sales Breakeven Analysis 1000 2000 3000 4000 5000 6000 7000 8000 9000 Units Sold O Fixed Costs Total Operating Costs Sales Revenues
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The Miramar Company is going to introduce one of three new products: a Widget, a Hummer, or a Nimnot. The market conditions (favourable, Stable, or unfavourable) will determine the profit or loss the company realizes, as shown In the following payoff table: State of Nature Favourable Stable Unfavourable Product 0.2 0.7 0.1 $ $ $ Widget 120,000 70,000 -30,000 Hummer 60,000 40,000 20,000 Nimnot 35,000 30,000 30,000 Required: 1. Develop the opportunity loss table and compute the expected opportunity loss for each product. 2. Determine how much the firm would be willing to pay to a market research firm to gain better information about future market conditions.
Check m A division can sell externally for $73 per unit. Its variable manufacturing costs are $42 per unit, and its variable marketing costs are $20 per unit. What is the optimal transfer price for transferring internally, assuming the division is operating at capacity? to search Multiple Choice O $20 $42 $62 $73 I Hi 37°F Cloudy ^4