The transfer price refers to the price at which the goods and services are exchanged between companies under common control or between divisions of the same company. The value of the lowest acceptable transfer price for the selling division, the highest acceptable transfer price for the buying division, the range of acceptable transfer price and will the managers voluntarily agree to transfer the units along with the reasons for the same.

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Answer 1

Question

Chapter 11, Problem 20P

1.

To determine

Introduction:

The transfer price refers to the price at which the goods and services are exchanged between companies under common control or between divisions of the same company.

The value of the lowest acceptable transfer price for the selling division, the highest acceptable transfer price for the buying division, the range of acceptable transfer price and will the managers voluntarily agree to transfer the units along with the reasons for the same.

2.

To determine

The transfer price refers to the price at which the goods and services are exchanged between companies under common control or between divisions of the same company.

To explain

The effect on the profits of the P Division, C division, and the entire company due to the change in the supply price of the P division.

3.

To determine

The transfer price refers to the price at which the goods and services are exchanged between companies under common control or between divisions of the same company.

The value of the lowest acceptable transfer price for the selling division, the highest acceptable transfer price for the buying division, the range of acceptable transfer prices and will the managers voluntarily agree to transfer units within the divisions along with the reason for the same.

4.

To determine

The transfer price is the price that is charged by one department of the company to another department of the same company for the transfer of goods and services.

The P Division should meet the price of the outside supplier or not.

The effect on the profits of the company as a whole when the P Division does not meet the price of the outside supplier.

5.

To determine

The transfer price is the price that is charged by one department of the company to another department of the same company for the transfer of goods and services.

Whether the C Division should purchase from the P Division at a higher price for the good of the company as a whole.

6.

To determine

The transfer price is the price that is charged by one department of the company to another department of the same company for the transfer of goods and services.

The effect on the profits of the company as a whole when the C Division is required to purchase 5,000 tons of pulp each year from the P Division at $70 per ton.

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Transfer Price with an Outside Market Hrubec Products. Inc., operates a Pulp Division that manufactures wood pulp for use in the production of various paper goods. Revenue and costs associated with a ton of pulp follow: Hrubec Products has just acquired a small company that manufactures paper cartons. This company will be treated as a division of Hrubec with full profit responsibility. The newly formed Carton Division is currently purchasing 5,000 tons of pulp per year from a supplier at a cost of $70 per ton, less a 10% purchase discount. Hrubec’s president is anxious for the Carton Division to begin purchasing its pulp from the Pulp Division if an acceptable transfer price can be worked out. Required: For (1) and (2) below, assume the Pulp Division can sell all of its pulp to outside customers for $70 per ton. 1. What is the lowest acceptable transfer price from the perspective of the Pulp Division? What is the highest acceptable transfer price from the perspective of the Carton…

Question 10.4 Big Machines Corp. has two divisions. Division Y manufactures components that can be sold in the external market place or transferred to Division Z for further processing. The following data relate to Division Y's component product. Variable manufacturing costs/unit $925 Fixed costs/unit at capacity $275 Selling price/unit $1,800 The capacity of the plant is 2,500 units per year. Division Z has offered to purchase 350 units from Division Y at a price of $1,600/unit, which is the market price of the component. The manager of Division Y has refused this offer stating that it would only return a rate of 25.00%, when the divisional target return on sales is 28.00%. The Division Y manager also states that additional fixed costs of $195,000 would be required to produce the 350 units. The corporate required rate of return is 18% of assets and the existing asset base in Division Y is $2,500,000. Required: How many units must Division Y sell in order…

Exercise 11-7 (Algo) Transfer Pricing from the Viewpoint of the Entire Company (LO11-3] Division A manufactures electronic circuit boards that can be sold to Division B of the same company or to outside customers. Last year, the following activity occurred in Division A: Selling price per circuit board Variable cost per circuit board Number of circuit boards: Produced during the year Sold to outside customers Sold to Division B $ 189 $ 120 20,300 14,500 5,800 Sales to Division B were at the same price as sales to outside customers. The circuit boards purchased by Division B were used in an electronic instrument manufactured by that division (one board per instrument). Division B incurred $300 in additional variable cost per instrument and then sold the instruments for $690 each. Required: 1. Calculate the net operating incomes earned by Division A, Division B, and the company as a whole. 2. Assume Division A's manufacturing capacity is 20,300 circuit boards. Next year, Division B wants…

Answer 2

Question

Chapter 11, Problem 20P

1.

To determine

Introduction:

The transfer price refers to the price at which the goods and services are exchanged between companies under common control or between divisions of the same company.

The value of the lowest acceptable transfer price for the selling division, the highest acceptable transfer price for the buying division, the range of acceptable transfer price and will the managers voluntarily agree to transfer the units along with the reasons for the same.

2.

To determine

The transfer price refers to the price at which the goods and services are exchanged between companies under common control or between divisions of the same company.

To explain

The effect on the profits of the P Division, C division, and the entire company due to the change in the supply price of the P division.

3.

To determine

The transfer price refers to the price at which the goods and services are exchanged between companies under common control or between divisions of the same company.

The value of the lowest acceptable transfer price for the selling division, the highest acceptable transfer price for the buying division, the range of acceptable transfer prices and will the managers voluntarily agree to transfer units within the divisions along with the reason for the same.

4.

To determine

The transfer price is the price that is charged by one department of the company to another department of the same company for the transfer of goods and services.

The P Division should meet the price of the outside supplier or not.

The effect on the profits of the company as a whole when the P Division does not meet the price of the outside supplier.

5.

To determine

The transfer price is the price that is charged by one department of the company to another department of the same company for the transfer of goods and services.

Whether the C Division should purchase from the P Division at a higher price for the good of the company as a whole.

6.

To determine

The transfer price is the price that is charged by one department of the company to another department of the same company for the transfer of goods and services.

The effect on the profits of the company as a whole when the C Division is required to purchase 5,000 tons of pulp each year from the P Division at $70 per ton.

Expert Solution & Answer

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See solution

Answer 3

Question

Chapter 11, Problem 20P

1.

To determine

Introduction:

The transfer price refers to the price at which the goods and services are exchanged between companies under common control or between divisions of the same company.

The value of the lowest acceptable transfer price for the selling division, the highest acceptable transfer price for the buying division, the range of acceptable transfer price and will the managers voluntarily agree to transfer the units along with the reasons for the same.

2.

To determine

The transfer price refers to the price at which the goods and services are exchanged between companies under common control or between divisions of the same company.

To explain

The effect on the profits of the P Division, C division, and the entire company due to the change in the supply price of the P division.

3.

To determine

The transfer price refers to the price at which the goods and services are exchanged between companies under common control or between divisions of the same company.

The value of the lowest acceptable transfer price for the selling division, the highest acceptable transfer price for the buying division, the range of acceptable transfer prices and will the managers voluntarily agree to transfer units within the divisions along with the reason for the same.

4.

To determine

The transfer price is the price that is charged by one department of the company to another department of the same company for the transfer of goods and services.

The P Division should meet the price of the outside supplier or not.

The effect on the profits of the company as a whole when the P Division does not meet the price of the outside supplier.

5.

To determine

The transfer price is the price that is charged by one department of the company to another department of the same company for the transfer of goods and services.

Whether the C Division should purchase from the P Division at a higher price for the good of the company as a whole.

6.

To determine

The transfer price is the price that is charged by one department of the company to another department of the same company for the transfer of goods and services.

The effect on the profits of the company as a whole when the C Division is required to purchase 5,000 tons of pulp each year from the P Division at $70 per ton.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 11, Problem 20P

1.

To determine

Introduction:

The transfer price refers to the price at which the goods and services are exchanged between companies under common control or between divisions of the same company.

The value of the lowest acceptable transfer price for the selling division, the highest acceptable transfer price for the buying division, the range of acceptable transfer price and will the managers voluntarily agree to transfer the units along with the reasons for the same.

2.

To determine

The transfer price refers to the price at which the goods and services are exchanged between companies under common control or between divisions of the same company.

To explain

The effect on the profits of the P Division, C division, and the entire company due to the change in the supply price of the P division.

3.

To determine

The transfer price refers to the price at which the goods and services are exchanged between companies under common control or between divisions of the same company.

The value of the lowest acceptable transfer price for the selling division, the highest acceptable transfer price for the buying division, the range of acceptable transfer prices and will the managers voluntarily agree to transfer units within the divisions along with the reason for the same.

4.

To determine

The transfer price is the price that is charged by one department of the company to another department of the same company for the transfer of goods and services.

The P Division should meet the price of the outside supplier or not.

The effect on the profits of the company as a whole when the P Division does not meet the price of the outside supplier.

5.

To determine

The transfer price is the price that is charged by one department of the company to another department of the same company for the transfer of goods and services.

Whether the C Division should purchase from the P Division at a higher price for the good of the company as a whole.

6.

To determine

The transfer price is the price that is charged by one department of the company to another department of the same company for the transfer of goods and services.

The effect on the profits of the company as a whole when the C Division is required to purchase 5,000 tons of pulp each year from the P Division at $70 per ton.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 5

Chapter 11, Problem 20P

1.

To determine

Introduction:

The transfer price refers to the price at which the goods and services are exchanged between companies under common control or between divisions of the same company.

The value of the lowest acceptable transfer price for the selling division, the highest acceptable transfer price for the buying division, the range of acceptable transfer price and will the managers voluntarily agree to transfer the units along with the reasons for the same.

2.

To determine

The transfer price refers to the price at which the goods and services are exchanged between companies under common control or between divisions of the same company.

To explain

The effect on the profits of the P Division, C division, and the entire company due to the change in the supply price of the P division.

3.

To determine

The transfer price refers to the price at which the goods and services are exchanged between companies under common control or between divisions of the same company.

The value of the lowest acceptable transfer price for the selling division, the highest acceptable transfer price for the buying division, the range of acceptable transfer prices and will the managers voluntarily agree to transfer units within the divisions along with the reason for the same.

4.

To determine

The transfer price is the price that is charged by one department of the company to another department of the same company for the transfer of goods and services.

The P Division should meet the price of the outside supplier or not.

The effect on the profits of the company as a whole when the P Division does not meet the price of the outside supplier.

5.

To determine

The transfer price is the price that is charged by one department of the company to another department of the same company for the transfer of goods and services.

Whether the C Division should purchase from the P Division at a higher price for the good of the company as a whole.

6.

To determine

The transfer price is the price that is charged by one department of the company to another department of the same company for the transfer of goods and services.

The effect on the profits of the company as a whole when the C Division is required to purchase 5,000 tons of pulp each year from the P Division at $70 per ton.

Answer 6

Chapter 11, Problem 20P

1.

To determine

Introduction:

The transfer price refers to the price at which the goods and services are exchanged between companies under common control or between divisions of the same company.

The value of the lowest acceptable transfer price for the selling division, the highest acceptable transfer price for the buying division, the range of acceptable transfer price and will the managers voluntarily agree to transfer the units along with the reasons for the same.

Answer 7

Chapter 11, Problem 20P

1.

To determine

Introduction:

The transfer price refers to the price at which the goods and services are exchanged between companies under common control or between divisions of the same company.

The value of the lowest acceptable transfer price for the selling division, the highest acceptable transfer price for the buying division, the range of acceptable transfer price and will the managers voluntarily agree to transfer the units along with the reasons for the same.

Answer 8

2.

To determine

The transfer price refers to the price at which the goods and services are exchanged between companies under common control or between divisions of the same company.

To explain

The effect on the profits of the P Division, C division, and the entire company due to the change in the supply price of the P division.

Answer 9

2.

To determine

The transfer price refers to the price at which the goods and services are exchanged between companies under common control or between divisions of the same company.

To explain

The effect on the profits of the P Division, C division, and the entire company due to the change in the supply price of the P division.

Answer 10

3.

To determine

The transfer price refers to the price at which the goods and services are exchanged between companies under common control or between divisions of the same company.

The value of the lowest acceptable transfer price for the selling division, the highest acceptable transfer price for the buying division, the range of acceptable transfer prices and will the managers voluntarily agree to transfer units within the divisions along with the reason for the same.

Answer 11

3.

To determine

The transfer price refers to the price at which the goods and services are exchanged between companies under common control or between divisions of the same company.

The value of the lowest acceptable transfer price for the selling division, the highest acceptable transfer price for the buying division, the range of acceptable transfer prices and will the managers voluntarily agree to transfer units within the divisions along with the reason for the same.

Answer 12

4.

To determine

The transfer price is the price that is charged by one department of the company to another department of the same company for the transfer of goods and services.

The P Division should meet the price of the outside supplier or not.

The effect on the profits of the company as a whole when the P Division does not meet the price of the outside supplier.

Answer 13

4.

To determine

The transfer price is the price that is charged by one department of the company to another department of the same company for the transfer of goods and services.

The P Division should meet the price of the outside supplier or not.

The effect on the profits of the company as a whole when the P Division does not meet the price of the outside supplier.

Answer 14

5.

To determine

The transfer price is the price that is charged by one department of the company to another department of the same company for the transfer of goods and services.

Whether the C Division should purchase from the P Division at a higher price for the good of the company as a whole.

Answer 15

5.

To determine

The transfer price is the price that is charged by one department of the company to another department of the same company for the transfer of goods and services.

Whether the C Division should purchase from the P Division at a higher price for the good of the company as a whole.

Answer 16

6.

To determine

The transfer price is the price that is charged by one department of the company to another department of the same company for the transfer of goods and services.

The effect on the profits of the company as a whole when the C Division is required to purchase 5,000 tons of pulp each year from the P Division at $70 per ton.

Answer 17

6.

To determine

The transfer price is the price that is charged by one department of the company to another department of the same company for the transfer of goods and services.

The effect on the profits of the company as a whole when the C Division is required to purchase 5,000 tons of pulp each year from the P Division at $70 per ton.

Answer 18

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Answer 19

Expert Solution & Answer

Answer 20

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Answer 21

Ch. 11 - Prob. 1Q Ch. 11 - Prob. 2Q Ch. 11 - Prob. 3Q Ch. 11 - Prob. 4Q Ch. 11 - Prob. 5Q Ch. 11 - Prob. 6Q Ch. 11 - Prob. 7Q Ch. 11 - Prob. 8Q Ch. 11 - Prob. 9Q Ch. 11 - Prob. 10Q

Solution Summary: The author explains that the transfer price is the price at which goods and services are exchanged between companies under common control or between divisions of the same company.

The transfer price is the price that is charged by one department of the company to another department of the same company for the transfer of goods and services.

Whether the C Division should purchase from the P Division at a higher price for the good of the company as a whole.

Want to see the full answer?

Chapter 11 Solutions

Solution Summary: The author explains that the transfer price is the price at which goods and services are exchanged between companies under common control or between divisions of the same company.

The transfer price is the price that is charged by one department of the company to another department of the same company for the transfer of goods and services. Whether the C Division should purchase from the P Division at a higher price for the good of the company as a whole.

Want to see the full answer?

Chapter 11 Solutions

The transfer price is the price that is charged by one department of the company to another department of the same company for the transfer of goods and services.

Whether the C Division should purchase from the P Division at a higher price for the good of the company as a whole.