Whether transfers should be made in division B if there is no unused capacity in division A and whether the market price is the correct transfer price.

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Answer 1

Question

Chapter 22, Problem 22.28P

1.

To determine

Whether transfers should be made in division B if there is no unused capacity in division A and whether the market price is the correct transfer price.

2.

To determine

Whether the 800 units should be transferred to division A and at what transfer price.

Given information:

The maximum capacity for this product is 1,200 units per month.

The maximum capacity for sales is 900 units per month.

The selling price is $275.

3.

To determine

The contribution to the company as a whole if the transfer were made and as a manager whether buying can be done at $240.

4.

To determine

The transfer price that would produce the same operating income for division A for the two options (a) cutting the external price to $270, with the certainty that the sale will rise to 1,200 units and (b) maintaining the external price of $275 for the 900 units and transferring the 300 units to division B at a price that would produce the same operating income.

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Answer 2

Question

Chapter 22, Problem 22.28P

1.

To determine

Whether transfers should be made in division B if there is no unused capacity in division A and whether the market price is the correct transfer price.

2.

To determine

Whether the 800 units should be transferred to division A and at what transfer price.

Given information:

The maximum capacity for this product is 1,200 units per month.

The maximum capacity for sales is 900 units per month.

The selling price is $275.

3.

To determine

The contribution to the company as a whole if the transfer were made and as a manager whether buying can be done at $240.

4.

To determine

The transfer price that would produce the same operating income for division A for the two options (a) cutting the external price to $270, with the certainty that the sale will rise to 1,200 units and (b) maintaining the external price of $275 for the 900 units and transferring the 300 units to division B at a price that would produce the same operating income.

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Answer 3

Question

Chapter 22, Problem 22.28P

1.

To determine

Whether transfers should be made in division B if there is no unused capacity in division A and whether the market price is the correct transfer price.

2.

To determine

Whether the 800 units should be transferred to division A and at what transfer price.

Given information:

The maximum capacity for this product is 1,200 units per month.

The maximum capacity for sales is 900 units per month.

The selling price is $275.

3.

To determine

The contribution to the company as a whole if the transfer were made and as a manager whether buying can be done at $240.

4.

To determine

The transfer price that would produce the same operating income for division A for the two options (a) cutting the external price to $270, with the certainty that the sale will rise to 1,200 units and (b) maintaining the external price of $275 for the 900 units and transferring the 300 units to division B at a price that would produce the same operating income.

Expert Solution & Answer

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Answer 4

Question

Chapter 22, Problem 22.28P

1.

To determine

Whether transfers should be made in division B if there is no unused capacity in division A and whether the market price is the correct transfer price.

2.

To determine

Whether the 800 units should be transferred to division A and at what transfer price.

Given information:

The maximum capacity for this product is 1,200 units per month.

The maximum capacity for sales is 900 units per month.

The selling price is $275.

3.

To determine

The contribution to the company as a whole if the transfer were made and as a manager whether buying can be done at $240.

4.

To determine

The transfer price that would produce the same operating income for division A for the two options (a) cutting the external price to $270, with the certainty that the sale will rise to 1,200 units and (b) maintaining the external price of $275 for the 900 units and transferring the 300 units to division B at a price that would produce the same operating income.

Expert Solution & Answer

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Answer 5

Chapter 22, Problem 22.28P

1.

To determine

Whether transfers should be made in division B if there is no unused capacity in division A and whether the market price is the correct transfer price.

2.

To determine

Whether the 800 units should be transferred to division A and at what transfer price.

Given information:

The maximum capacity for this product is 1,200 units per month.

The maximum capacity for sales is 900 units per month.

The selling price is $275.

3.

To determine

The contribution to the company as a whole if the transfer were made and as a manager whether buying can be done at $240.

4.

To determine

The transfer price that would produce the same operating income for division A for the two options (a) cutting the external price to $270, with the certainty that the sale will rise to 1,200 units and (b) maintaining the external price of $275 for the 900 units and transferring the 300 units to division B at a price that would produce the same operating income.

Answer 6

Chapter 22, Problem 22.28P

1.

To determine

Whether transfers should be made in division B if there is no unused capacity in division A and whether the market price is the correct transfer price.

Answer 7

Chapter 22, Problem 22.28P

1.

To determine

Whether transfers should be made in division B if there is no unused capacity in division A and whether the market price is the correct transfer price.

Answer 8

2.

To determine

Whether the 800 units should be transferred to division A and at what transfer price.

Given information:

The maximum capacity for this product is 1,200 units per month.

The maximum capacity for sales is 900 units per month.

The selling price is $275.

Answer 9

2.

To determine

Whether the 800 units should be transferred to division A and at what transfer price.

Given information:

The maximum capacity for this product is 1,200 units per month.

The maximum capacity for sales is 900 units per month.

The selling price is $275.

Answer 10

3.

To determine

The contribution to the company as a whole if the transfer were made and as a manager whether buying can be done at $240.

Answer 11

3.

To determine

The contribution to the company as a whole if the transfer were made and as a manager whether buying can be done at $240.

Answer 12

4.

To determine

The transfer price that would produce the same operating income for division A for the two options (a) cutting the external price to $270, with the certainty that the sale will rise to 1,200 units and (b) maintaining the external price of $275 for the 900 units and transferring the 300 units to division B at a price that would produce the same operating income.

Answer 13

4.

To determine

The transfer price that would produce the same operating income for division A for the two options (a) cutting the external price to $270, with the certainty that the sale will rise to 1,200 units and (b) maintaining the external price of $275 for the 900 units and transferring the 300 units to division B at a price that would produce the same operating income.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 22 - Prob. 22.1Q Ch. 22 - Describe three criteria you would use to evaluate...Ch. 22 - What is the relationship among motivation, goal...Ch. 22 - Name three benefits and two costs of...Ch. 22 - Organizations typically adopt a consistent...Ch. 22 - Transfer pricing is confined to profit centers. Do...Ch. 22 - What are the three methods for determining...Ch. 22 - What properties should transfer-pricing systems...Ch. 22 - All transfer-pricing methods give the same...Ch. 22 - Prob. 22.10Q

Whether transfers should be made in division B if there is no unused capacity in division A and whether the market price is the correct transfer price.

Whether transfers should be made in division B if there is no unused capacity in division A and whether the market price is the correct transfer price.

Whether the 800 units should be transferred to division A and at what transfer price. Given information: The maximum capacity for this product is 1,200 units per month. The maximum capacity for sales is 900 units per month. The selling price is $275.

The contribution to the company as a whole if the transfer were made and as a manager whether buying can be done at $240.

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Chapter 22 Solutions

Whether the 800 units should be transferred to division A and at what transfer price.

Given information:

The maximum capacity for this product is 1,200 units per month.

The maximum capacity for sales is 900 units per month.

The selling price is $275.