MANAGERIAL ACCT FOR MANAGERS LL\AC
5th Edition
ISBN: 9781265872298
Author: Noreen
Publisher: MCG
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Question
Chapter 11A, Problem 11A.5P
1.
To determine
Division will accept or reject the price of $340 if idle capacity is of 1,000-unit order.
Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.
2.
To determine
Financial advantage for the company if Q Divisions rejects the price of $340
Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.
3.
To determine
Financial advantage for the company if Q Divisions accepts the price of $340
Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.
4.
To determine
Conclusions drawn after the use of market price as transfer price in intra-company transactions.
Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.
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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…
Bollozos Afterlife Corporation's Division A manufactures and sells product Brand X,
which is used in refrigeration systems. Per-unit variable manufacturing and selling costs
amount to P20 and P5, respectively The Division can sell this item to external domestic
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· If Division A had no excess capacity, what transfer price would the Divisions
management set?
If Division A had no excess capacity, what transfer price would the Divisions
management set assuming that Division A was able to reduce the variable cost of
internal transfers by P4 per unit
Company E has two divisions, Division A and Division B. Division A is currently
buying Component X from an external seller for $13. 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 market-based transfer price?
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Chapter 11A Solutions
MANAGERIAL ACCT FOR MANAGERS LL\AC
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