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.

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Answer 1

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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Florida Kitchens produces high-end cooking ranges. The costs to manufacture and market the ranges at the company’s volume of 3,000 units per quarter are shown in the following table: Unit manufacturing costs Variable costs $ 1,440 Fixed overhead 720 Total unit manufacturing costs $ 2,160 Unit nonmanufacturing costs Variable 360 Fixed 840 Total unit nonmanufacturing costs 1,200 Total unit costs $ 3,360 The company has the capacity to produce 3,000 units per quarter and always operates at full capacity. The ranges sell for $4,000 per unit. Required: a. Florida Kitchens receives a proposal from an outside contractor, Burns Electric, who will manufacture 1,200 of the 3,000 ranges per quarter and ship them directly to Florida’s customers as orders are received from the sales office at Florida. Florida would provide the materials for the ranges, but Burns would assemble, box, and ship the ranges. The variable manufacturing costs would be…

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Answer 2

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.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 3

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.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

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.

Expert Solution & Answer

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Answer 5

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.

Answer 6

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.

Answer 7

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.

Answer 8

B.

To determine

Whether the chips should be transferred to the process control division to replace circuit boards.

Answer 9

B.

To determine

Whether the chips should be transferred to the process control division to replace circuit boards.

Answer 10

C.

To determine

The transfer price or the range of prices that would ensure goal congruency among the division managers.

Answer 11

C.

To determine

The transfer price or the range of prices that would ensure goal congruency among the division managers.

Answer 12

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.

Answer 13

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.

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 the chips should be transferred to the process control division to replace circuit boards.

The transfer price or the range of prices that would ensure goal congruency among the division managers.

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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Chapter 22 Solutions