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.

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Answer 1

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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NDB Company has a factory with fixed costs of $650,000 and a production capacity of 225,000 units annually. Its product sells with a 36% contribution margin. The target profit is $470,000. At full production, what does the selling price per unit need to be? Show your complete solution.

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Answer 2

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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Answer 3

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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Answer 4

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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Answer 5

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.

Answer 6

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.

Answer 7

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.

Answer 8

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.

Answer 9

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.

Answer 10

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.

Answer 11

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.

Answer 12

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.

Answer 13

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.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 11A - Prob. 11A.1E Ch. 11A - Prob. 11A.2E Ch. 11A - Prob. 11A.3E Ch. 11A - Prob. 11A.4P Ch. 11A - Prob. 11A.5P Ch. 11A - Prob. 11A.6P Ch. 11A - Prob. 11A.7C

Solution Summary: The author explains that the price of 340 will be rejected by the Q Division if both the division S and Q have idle capacity and view the company as a whole.

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Chapter 11A Solutions