Gold&Blue's Northern Division is currently purchasing a part from an outside supplier. The company's Southern Division, which has no excess capacity, makes and sells this part for external customers at a variable cost of P19 and a selling price of P31. If Southern begins sales to Northern, it (1) will use the general transfer-pricing rule and (2) will be able to reduce variable cost on internal transfers by P3. On the basis of this information, Southern would establish a transfer price of: P20. P28. P23. P25.

Gold&Blue's Northern Division is currently purchasing a part from an outside supplier. The company's Southern Division, which has no excess capacity, makes and sells this part for external customers at a variable cost of P19 and a selling price of P31. If Southern begins sales to Northern, it (1) will use the general transfer-pricing rule and (2) will be able to reduce variable cost on internal transfers by P3. On the basis of this information, Southern would establish a transfer price of: P20. P28. P23. P25.

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter24: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 4CMA

See similar textbooks

Similar questions

AutoTech's Northern Division is currently purchasing a part from an outside supplier. The company's Southern Division, which has no excess capacity, makes and sells this part for external customers at a variable cost of $19 and a selling price of $31. If Southern begins sales to Northern, it (1) will use the general transfer-pricing rule and (2) will be able to reduce variable cost on internal transfers by $3. On the basis of this information, Southern would establish a transfer price of?
Green Auto's Northern Division is currently purchasing a part from an outside supplier. The company's Southern Division, which has no excess capacity, makes and sells this part for external customers at a variable cost of $19 and a selling price of $31. If Southern begins sales to Northern, it (1) will use the general transfer-pricing rule and (2) will be able to reduce variable cost on internal transfers by $3. On the basis of this information, Southern would establish a transfer price of: $16. $19. $28. $31. None of the other answers are correct.
NUBD's X Division is currently purchasing a part from an outside supplier. The company's Y Division, which has excess capacity, makes and sells this part for external customers at a variable cost of P22 and a selling price of P34. If Y begins sales to X, it (1) will use the general transfer-pricing rule and (2) will be able to reduce variable cost on internal transfers by P2. If sales to outsiders will not be affected, Y would establish a transfer price of:
McKenna's Florida Division is currently purchasing a part from an outside supplier. The company's Alabama Division, which has excess capacity, makes and sells this part for external customers at a variable cost of $22 and a selling price of $34. If Alabama begins sales to Florida, it (1) will use the general transfer-pricing rule and (2) will be able to reduce variable cost on internal transfers by $4. If sales to outsiders will not be affected, Alabama would establish a transfer price of:
Bollozos Afterlife Corporation's Division A manufactures and sells product Brand X, which is used in refrigeration systems. Per-unit variable manufacturing and selling costs amount to P20 and P5, respectively The Division can sell this item to external domestic customers for P36 or, alternatively, transfer the product to the company's Division B. Division B is currently purchasing a similar unit from Taiwan for P33. Assume use of the general transfer-pricing rule. •What is the most that the Division B would be willing to pay the Division A for one unit? • If Division A had excess capacity, what transfer price would the Division's management set? · If Division A had no excess capacity, what transfer price would the Divisions management set? If Division A had no excess capacity, what transfer price would the Divisions management set assuming that Division A was able to reduce the variable cost of internal transfers by P4 per unit
If the Vega Division sells wheels to the Walsh Division, Vega can avoid P2 per wheel in sales commissions. An outside supplier has offered to supply wheels to the Walsh Division for P41 each. Suppose that the Vega Division has ample idle capacity so that transfers to the Walsh Division would not cut into its sales to outside customers. What should be the lowest acceptable transfer price from the perspective of the Vega Division?
Compute the following :- 1. Calculate the lowest acceptable transfer price for the seller (Division A)? 2. Calculate the highest acceptable transfer price for the buyer (Division B)? 3. Calculate the range of acceptable transfer prices between the two divisions? 4. Assume Division A offers to sell 15,000 units to Division B for $74 and that Division B refuses this price. What will be the loss in potential prodits for the company whole as a whole
A company is providing its product to the consumer through the wholesalers. The managing director of the company thinks that if the company starts selling through retailers or to the consumers directly, it can increase its sales, charge higher prices and make more profit. On the basis of the following information and consider variable cost is rial 2.50 per unit and fixed cost is rial 50000. (a) Advise the managing director whether the company should change its channel of distribution or not (with calculation and Justification). (b) Provide suggestions and recommendations on the basis of analysis.
If the Vega Division sells wheels to the Walsh Division, Vega can avoid P2 per wheel in sales commissions. An outside supplier has offered to supply wheels to the Walsh Division for P41 each. Suppose that the Vega Division has ample idle capacity so that transfers to the Walsh Division would not cut into its sales to outside customers. What should be the lowest acceptable transfer price from the perspective of the Vega Division? P22 P35 P45 None of the choices
1. Determine the minimum transfer price that Cutting Division would accept. 2. Determine the maximum transfer price that the Assembly Division would pay. 3. If Cutting Division will accept the offer of Assembly Division, how much is the change in its operating income ? 4. If Cutting Division will make a counter offer of P45.25 per part, how much is the change in the operating income of Assembly Division assuming that its external supplier could not supply its needed quantity?
Required information [The following information applies to the questions displayed below.] Illinois Metallurgy Corporation has two divisions. The Fabrication Division transfers partially completed components to the Assembly Division at a predetermined transfer price. The Fabrication Division's standard variable production cost per unit is $490. The division has no excess capacity, and it could sell all of its components to outside buyers at $650 per unit in a perfectly competitive market. 2. What would be the transfer price if the Fabrication Division had excess capacity? Transfer price of 7 Next 7.
Required information [The following information applies to the questions displayed below.] Illinois Metallurgy Corporation has two divisions. The Fabrication Division transfers partially completed components to the Assembly Division at a predetermined transfer price. The Fabrication Division's standard variable production cost per unit is $550. The division has no excess capacity, and it could sell all of its components to outside buyers at $770 per unit in a perfectly competitive market. 2. What would be the transfer price if the Fabrication Division had excess capacity? Transfer price < Prev 7 of 7 Next hulu