MANAGERIAL ACCT FOR MANAGERS LL\AC
5th Edition
ISBN: 9781265872298
Author: Noreen
Publisher: MCG
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Chapter 11A, Problem 11A.7C
1.
To determine
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.
The lowest acceptable transfer price for E Division and would the X52 fitting should be supplied top B Division for $5 as requested.
2.
To determine
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.
The financial advantage to the B Division if E Division supplies airplane brakes for $50.
3.
To determine
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.
The highest acceptable transfer price for the B Division and possibility of two divisional managers to agree to the transfer price.
4.
To determine
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.
Problem faced by the organizational behavior and advise that can be given to company’s president.
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Students have asked these similar questions
packman 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. $18
A4
Case 11-26 (Algo) Transfer Pricing; Divisional Performance [LO11-3]
Weller Industries is a decentralized organization with six divisions. The company’s Electrical Division produces a variety of electrical items, including an X52 electrical fitting. The Electrical Division (which is operating at capacity) sells this fitting to its regular customers for $8.30 each; the fitting has a variable manufacturing cost of $4.70.
The company’s Brake Division has asked the Electrical Division to supply it with a large quantity of X52 fittings for only $6.30 each. The Brake Division, which is operating at 50% of capacity, will put the fitting into a brake unit that it will produce and sell to a large commercial airline manufacturer. The cost of the brake unit being built by the Brake Division follows:
Purchased parts (from outside vendors)
$
23.60
Electrical fitting X52
6.30
Other variable costs
14.43
Fixed overhead and administration
8.40
Total cost per brake unit
$…
Chapter 11A Solutions
MANAGERIAL ACCT FOR MANAGERS LL\AC
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Similar questions
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- Division A makes a part with the following characteristics: Production capacity in units Selling price to outside customers Variable cost per unit Total fixed costs $ $ 30,200 units 22 17 $102,900 Division B, another division of the same company, would like to purchase 17,300 units of the part each period from Division A. Division B is now purchasing these parts from an outside supplier at a price of $20 each. 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. If Division A refuses to accept the $20 price internally and Division B continues to buy from the outside supplier, the company as a whole will be:arrow_forwardDivision A makes a part with the following characteristics: Production capacity in units 31,100 units Selling price to outside customers $ 25 Variable cost per unit $ 19 Total fixed costs $ 107,200 Division B, another division of the same company, would like to purchase 16,500 units of the part each period from Division A. Division B is now purchasing these parts from an outside supplier at a price of $22 each. Suppose that Division A is operating at capacity and can sell all of its output to outside customers at its usual selling price. If Division A agrees to sell the parts to Division B at $22 per unit, the company as a whole will be: Multiple Choice worse off by $99&. better off by $49&. There will be no change in the status of the company as a whole. worse off by $49&.arrow_forwardPlease Answer No. 2 Provide a complete solution. Thank Youarrow_forward
- Case 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_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_forwardDivision A makes a part with the following characteristics: Production capacity in units 31,100 units Selling price to outside customers $ 25 Variable cost per unit $ 19 Total fixed costs $ 107,200 Division B, another division of the same company, would like to purchase 16,500 units of the part each period from Division A. Division B is now purchasing these parts from an outside supplier at a price of $22 each. 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. If Division A refuses to accept the $22 price internally and Division B continues to buy from the outside supplier, the company as a whole will be: Multiple Choice worse off by $49,500 each period. worse off by $99,000 each period. worse off by $25,400 each period. worse off by $65,100 each period.arrow_forward
- 6. Transfer Price Computation Pakyaw Company is operating with two divisions. Division S is producing a product line that is required as a component part of the product being manufactured by Division B. For Division S, the costs of producing the component part per unit are: P 10 Direct materials Direct labor P8 P5 P2 Variable factory overhead Fixed factory overhead The product of Division S is being sold in a highly competitive market for P 30 per unit. Division B is currently buying 80% of the production output of Division S at a negotiated price of P 28 per unit. It is expected that 25,000 units of product will be produced by Division S. With emphasis on divisional welfare rather than the company's welfare, a new transfer price must be developed. It is suggested that a 40% mark-up on cost will be added when transferring the product from Division S to Division B. The unit selling price of the product of Division B is P 45 while the additional unit processing cost is P 8. REQUIRED:…arrow_forwardanswer in text form please (without image)arrow_forward2 Bartolo Delivery has two divisions, air express and ground service, that share the common costs of the company's communications network, which are $8,500,000 a year. You have the following information about the two divisions and the common communications network. Air express Ground service Required: a. What is the communications network cost that is charged to each division if the number of calls is used as the allocation basis? b. What is the communications network cost to each division using time on network as the allocation basis? Required A Calls (thousands) 581,000 249,000 Complete this question by entering your answers in the tabs below. Division Air express Ground service Time on Network (hours) 340,000 1,020,000 Required B What is the communications network cost that is charged to each division if the number of calls is used as the allocation basis? (Do not round intermediate calculations.) Network Cost Required Barrow_forward
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