1.
Introduction:
Transfer price is the price at which goods and services are transferred between divisions in an organization. The price charged to transfer goods and services is recorded as an expense in the buying division and revenue in the selling division.
The lowest transfer price acceptable by Electrical Division. Also, determine whether the Electrical division supplies the units to the Brake division.
2.
Introduction:
Transfer price is the price at which goods and services are transferred between divisions in an organization. The price charged to transfer goods and services is recorded as an expense in the buying division and revenue in the selling division.
The financial advantage or disadvantage for the company as a whole if the Electrical Division sells units to the Brake Division.
3.
Introduction:
Transfer price is the price at which goods and services are transferred between divisions in an organization. The price charged to transfer goods and services is recorded as an expense in the buying division and revenue in the selling division.
The highest transfer price acceptable by Beta Division. Also, determine at what transfer price both the division manager agree to transfer the supplies.
4.
Introduction:
Transfer price is the price at which goods and services are transferred between divisions in an organization. The price charged to transfer goods and services is recorded as an expense in the buying division and revenue in the selling division.
The organizational behavior problem and the advice to the president of the company.
Want to see the full answer?
Check out a sample textbook solutionChapter 11 Solutions
MANAGERIAL ACCT(LL)+CONNECT+PROCTORIO PL
- Edwards Company has two operating divisions, A and B. The following information is provided for Division A: Unit selling price $158 $108 $ 28 Unit variable costs Unit fixed costs Division B uses the type of product produced by Division A and has approached Division A about buying the product internally. Division B is currently paying $153 to purchase the product from an outside source. If Division A sells internally it can save $14.0 per unit in variable costs. Assuming that Division A has sufficient excess capacity to produce all of the units requested by Division B, which of the following is the lowest price Division A should consider for the transfer? Multiple Choice $94.00 $108.00 $153.00 $144.00arrow_forwardCase 11-26 (Algo) Transfer Pricing; Divisional Performance [LO11-3] Weller Industries has six divisions. Its Electrical Division (which is operating at capacity) produces a variety of electrical items, including an X52 electrical fitting that it sells to regular customers for $8.00 each. The fitting has a variable manufacturing cost of $4.47. The company's Brake Division wants the Electrical Division to provide a large quantity of X52 fittings for $6.00 each. The Brake Division, which is operating at 50% of capacity, will put the fitting into a brake unit it produces and sells to an airplane manufacturer. The cost of the brake unit being built by the Brake Division follows: Purchased parts (from outside vendors) Electrical fitting X52 Other variable costs Fixed overhead and administration Total cost per brake unit $ 22.80 6.00 14.21 8.20 $ 51.21 Although the Brake Division's proposed price of $6.00 for the X52 fitting is well below the Electrical Division's regular price of $8.00, the…arrow_forwardPlease Answer No. 2 Provide a complete solution. Thank Youarrow_forward
- 4arrow_forwardStarcic Products, Incorporated, has a Connector Division that manufactures and sells a number of products, including a standard connector. Data concerning that connector appear below: Capacity in units Selling price to outside customers Variable cost per unit Fixed cost per unit (based on capacity) 45,900 $95.00 $ 61.50 $15.00 The company has a Transmission Division that needs 6,900 special heavy-duty connectors per year. The Connector Division's variable cost to manufacture and ship this special connector would be $66,50 per unit. Making these special connectors would require more manufacturing resources. Therefore, the Connector Division would have to reduce its production and sales of regular connectors to outside customers from 45,900 units per year to 38,850 units per year. Required: As far as the Connector Division is concerned, what is the lowest acceptable transfer price for the special connectors? Note: Round your answer to 2 decimal places. Lowest acceptable transfer pricearrow_forwardExercise 15-27 (Algo) Evaluate Transfer Pricing System (LO 15-2) Lola Metals has two decentralized divisions, Stamping and Finishing. Finishing always has purchased certain units from Stamping at $48 per unit. Stamping plans to raise the price to $60 per unit, the price it receives from outside customers. As a result, Finishing is considering buying these units from outside suppliers for $48 per unit. Corporate policy allows division managers to choose both customers and suppliers regardless of the transfer price. Stamping's costs follow: Variable costs per unit Annual fixed costs Annual production of these units sold to Alpha Required: a. If Finishing buys from an outside supplier, the facilities that Stamping uses to produce these units will remain idle. What will be the impact on corporate profits if Lola Metals enforces a transfer price of $60 per unit between Stamping and Finishing? b. Suppose Lola Metals enforces a transfer price of $48 and insists that Stamping sell to Finishing…arrow_forward
- A4arrow_forwardpackman company has a division that manufactures a component that sells for $72 and has variable costs of $29 and fixed costs of $18. another division wants to purchase the component. what is the minimum transfer price if the division is operating at capacity? a. $72 b. $29 c. $47 d. $18arrow_forwardTransfer Pricing from the Viewpoint of the Entire Company Division A manufactures electronic circuit boards. The boards can be sold either to Division B of the same company or to outside customers. Last year, the following activity occurred in Division A: 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 $100 in additional variable cost per instrument and then sold the instruments for $300 each. Required: 1. Prepare income statements for Division A, Division B, and the company as a whole. 2. Assume Division A’s manufacturing capacity is 20,000 circuit boards. Next year, Division B wants to purchase 5,000 circuit boards from Division A rather than 4,000. (Circuit boards of this type are not available from outside sources.) From the standpoint of the company as a whole, should Division A sell the 1,000…arrow_forward
- sarrow_forwardCompany E has two divisions, Division A and Division B. Division A is currently buying Component X from an external seller for $12. Division B produces Component X and has excess capacity. Using the following data, what would the transfer price per unit if Division A purchased Component X from Division B at the cost-based transfer price? Variable cost per unit $7.48 • Fixed cost per unit 1.97 • Division B sales price of Component X 14.50arrow_forwardVinubhaiarrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education