Horngren's Cost Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText - Access Card Package (16th Edition)
16th Edition
ISBN: 9780134642468
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Question
Chapter 22, Problem 22.37P
A.
To determine
Transfer Pricing:
This refers to a process of pricing in which one sub-unit of an organization charges a price to another sub-unit for supplying a product or service to the sub-unit of the same organization.
To determine: The contribution margin per direct-labor of selling X and D, the number of X and D that the semiconductor division should manufacture and sell and the division’s annual contribution margin.
B.
To determine
Whether the chips should be transferred to the process control division to replace circuit boards.
C.
To determine
The transfer price or the range of prices that would ensure goal congruency among the division managers.
D.
To determine
Whether the answer to the requirement C will be different if labor capacity in the S division were 60,000 hours instead of 55,000 hours.
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Assume that a division of Sony makes an electronic component for its speakers. Its manufacturing process for the component is a highly automated part of a just-in-time production system. All labor is considered to be an overhead cost, and all overhead is regarded as fixed with respect to output volume. Production costs for 100,000 units of the component are as follows:
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Flash E Card Manufacturing manufactures software parts for the computer software systems that produce e -cards. The Flash II part is currently manufactured in the Computer Department. The Data Department also produces the part and the plant has excess
capacity to produce the Flash ll part. The current market price of the Flash Il part is $500. The managerial accountant reported the following manufacturing costs and variable expense data:
Flash E-Card Manufacturing
Manufacturing Costs and Variable Expense Report
Flash Component
Direct materials
$800
$170
Direct labor
$110
Variable manufacturing overhead
Fixed manufacturing overhead (current production level)
Variable selling expenses (only incurred on sales to outside consumers)
$125
$140
If the highest acceptable transfer price is $500 in the market, what is the lowest acceptable in house price the Data Department should receive to produce the part in house at the Computer Department?
O A. $1,080
О В. $800
О С. $170
O D. $110
Chapter 22 Solutions
Horngren's Cost Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText - Access Card Package (16th Edition)
Ch. 22 - Prob. 22.1QCh. 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
Ch. 22 - Prob. 22.11QCh. 22 - Prob. 22.12QCh. 22 - Prob. 22.13QCh. 22 - Under the general guideline for transfer pricing,...Ch. 22 - How should managers consider income tax issues...Ch. 22 - Evaluating management control systems, balanced...Ch. 22 - Cost centers, profit centers, decentralization,...Ch. 22 - Prob. 22.18ECh. 22 - Prob. 22.19ECh. 22 - Multinational transfer pricing, effect of...Ch. 22 - Prob. 22.21ECh. 22 - Multinational transfer pricing, global tax...Ch. 22 - Prob. 22.23ECh. 22 - Prob. 22.24ECh. 22 - Transfer-pricing problem (continuation of 22-24)....Ch. 22 - Prob. 22.26PCh. 22 - Prob. 22.27PCh. 22 - Effect of alternative transfer-pricing methods on...Ch. 22 - Goal-congruence problems with cost-plus...Ch. 22 - Multinational transfer pricing, global tax...Ch. 22 - Transfer pricing, external market, goal...Ch. 22 - Prob. 22.32PCh. 22 - Transfer pricing, goal congruence, ethics. Cocoa...Ch. 22 - Prob. 22.34PCh. 22 - Transfer pricing, perfect and imperfect markets....Ch. 22 - Prob. 22.36PCh. 22 - Prob. 22.37P
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