**TB MC Qu. 15-33 (Algo) Information for Division X****Context:**This information pertains to Division X of a decentralized company.**Financial Details:**- **Selling Price:** $105 per unit- **Variable Cost per Unit:** $48- **Fixed Cost per Unit:** $20- **Sales Volume (Units):** 21,200 units- **Capacity (Units):** 24,500 units**Scenario:**Division Y of the same company wants to purchase all its units internally. Division Y requires 9,900 units each period and currently pays $99 per unit to an external supplier. Determine the lowest price Division X could accept from Division Y, assuming Division Y prefers a sole supplier and will not purchase less than 9,900 units from any supplier.

DECENTRALIZATION COMPANY IS WHERE DECISION MAKING DELEGATES TO THE MIDDLE OR LOWER SUBORDINATES FROM…

You have been provided with the following information for Division X of a decentralized company: Selling price Variable cost per unit Fixed cost per unit Sales volume (units) %24 105 48 20 21, 200 24,500 Capacity (units) Division Y of the same company would like to purchase all of its units internally. Division Y needs 9,900 units each period and currently pays $99 per unit to an outside firm, What is the lowest price that Division X could accept from Division Y? (Assume that Division Y wants to use a sole supplier and will not purchase less than 9,900 from a supplier.)

You have been provided with the following information for Division X of a decentralized company: Selling price Variable cost per unit Fixed cost per unit Sales volume (units) %24 105 48 20 21, 200 24,500 Capacity (units) Division Y of the same company would like to purchase all of its units internally. Division Y needs 9,900 units each period and currently pays $99 per unit to an outside firm, What is the lowest price that Division X could accept from Division Y? (Assume that Division Y wants to use a sole supplier and will not purchase less than 9,900 from a supplier.)

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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Division A makes a part with the following characteristics: Production capacity in units 15,000 units Selling price to outside customers $30 Variable cost per unit $20 Total fixed costs $60,000 Division B, another division of the same company, would like to purchase 5,000 units of the part each period from Division A. Suppose that Division A has ample idle capacity to handle all of Division B's needs without any increase in fixed costs and without cutting into sales to outside customers. What would be the minimum acceptable price that Division A would accept to transfer 5,000 units of the part to Division B? $30 $20 $10 None of the above 2. Jack Sparrow, Inc. produces and sells 20,000 units of Product X each month. The selling price of Product X is $30 per unit, and variable expenses are $21 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $50,000 of the $250,000 in fixed expenses charged…
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Division A of SLG Company produces a part it sells to other companies. Sales and cost data for the part are as follows: Capacity in units 60,000 units Selling price per unit O $27 per unit O $39 per unit O $36 per unit O $41 per unit Variable cost per unit O None of the above. Fixed cost per unit at capacity Division B, another division of SLG Company, would like to buy this part from Division A. Division B is currently purchasing the part from an outside source at $38 per unit. If Division A sells to Division B, then $1 in Division A's variable costs can be avoided. Assume Division A has enough idle capacity to handle all of Division B's needs without any increase in fixed costs and without interfering with outside sales. According to the transfer pricing guidelines, what is the lowest acceptable transfer price from the perspective of Division A? $40 per unit $28 per unit $9 per unit
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