7 Transfer PricingWiring used by the Appliance Division of Kaufman Manufacturing is currently purchased from outside suppliers at a cost of $25 per unit. However, the samematerials are available from the Electronic Division. The Electronic Division has unused capacity and can produce the materials needed by the ApplianceDivision at a variable cost of $20 per unit.Assume that a transfer price of $22 has been established and that 150,000 units of materials are transferred, with no reduction in the Electronic Division'scurrent sales.a. How much would Kaufman Manufacturing's total operating income increase?<b. How much would the Appliance Division's operating income increase?c. How much would the Electronic Division's operating income increase?d. If the negotiated price approach is used, what would be the range of acceptable transfer prices and why?The transfer prices should be between variable cost and market price when the supplier division has excess capacity in order to give the divisiFeedbackCheck My Worka. Multiply the units transferred by the difference between the market price (purchasing company) and the variable cost per unit.Check My WorkEmail InetristarSave and CulePreviousion f33501222

Transfer Pricing Analysis for Kaufman ManufacturingScenario:The Appliance Division purchases wiring…

Answered: Transfer Pricing Wiring used by the…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 17E: Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside...

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Hudson Corporation is considering three options for managing its data warehouse: continuing with its own staff, hiring an outside vendor to do the managing, or using a combination of its own staff and an outside vendor. The cost of the operation depends on future demand. The annual cost of each option (in thousands of dollars) depends on demand as follows: If the demand probabilities are 0.2, 0.5, and 0.3, which decision alternative will minimize the expected cost of the data warehouse? What is the expected annual cost associated with that recommendation? Construct a risk profile for the optimal decision in part (a). What is the probability of the cost exceeding $700,000?
Materials used by Angela Bread Company in producing Division A's product are currently purchased from outside suppliers at a cost of $30 per unit. However, the same materials are available from Division B. Division B has unused capacity and can produce the materials needed by Division A at a variable cost of $20 per unit. 1. Assuming transfer price of $25, how much would the income from operations of Division B increase? 2. If the negotiated price approach is used, what would be the range of acceptable transfer prices?
Decision on Transfer Pricing Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside suppliers at a cost of $1,350 per unit. However, the same materials are available from the Components Division. The Components Division has unused capacity and can produce the materials needed by the Instrument Division at a variable cost of $900 per unit. Assume that a transfer price of $1,200 has been established and that 75,000 units of materials are transferred, with no reduction in the Components Division's current sales. a. How much would Ziegler Inc.'s total operating income increase?$fill in the blank 1 b. How much would the Instrument Division's operating income increase?$fill in the blank 2 c. How much would the Components Division's operating income increase?$fill in the blank 3 d. Any transfer price will cause the total income of the company to , as long as the supplier division capacity is toward making materials for products that are…
Transfer Pricing Wiring used by the Appliance Division of Kaufman Manufacturing is currently purchased from outside suppliers at a cost of $25 per unit. However, the same materials are available from the Electronic Division. The Electronic Division has unused capacity and can produce the materials needed by the Appliance Division at a variable cost of $20 per unit. Assume that a transfer price of $22 has been established and that 150,000 units of materials are transferred, with no reduction in the Electronic Division’s current sales. a. How much would Kaufman Manufacturing’s total operating income increase?$ b. How much would the Appliance Division’s operating income increase?$ c. How much would the Electronic Division’s operating income increase?$ d. If the negotiated price approach is used, what would be the range of acceptable transfer prices and why?
Materials used by Ford Company in producing Division A's product are currently purchased from outside suppliers at a cost of $30 per unit. However, the same materials are available from Division B. Division B has unused capacity and can produce the materials needed by Division A at a variable cost of $20 per unit. a. If a transfer price of $25 per unit is established and 60,000 units of material are transferred with no reductions in Division B's current sales, how much would Ford Company's total operating income increase?$fill in the blank 1 b. How much would the operating income of Division A increase?$fill in the blank 2 c. How much would the operating income of Division B increase?$fill in the blank 3 d. If the negotiated price approach is used, what would be the range of acceptable transfer prices? Round your answer to two decimal places.$fill in the blank 4 to $fill in the blank 5
The Windshield division of Jaguar Company makes windshields for use in its Assembly division. The Windshield division incurs variable costs of $208 per windshield and has capacity to make 670,000 windshields per year. The market price is $530 per windshield. The Windshield division incurs total fixed costs of $4,000,000 per year. If the Windshield division has excess capacity, what is the range of possible transfer prices that could be used on transfers between the Windshield and Assembly divisions? Transfer price per windshield will be at least but not more than
Materials used by Ford Company in producing Division A's product are currently purchased from outside suppliers at a cost of $30 per unit. However, the same materials are available from Division B. Division B has unused capacity and can produce the materials needed by Division A at a variable cost of $20 per unit. a. If a transfer price of $25 per unit is established and 60,000 units of material are transferred with no reductions in Division B's current sales, how much would Ford Company's total operating income increase? $ 600,000 b. How much would the operating income of Division A increase? $ 300,000 v c. How much would the operating income of Division B increase? $ 300,000 V d. If the negotiated price approach is used, what would be the range of acceptable transfer prices? Round your answer to two decimal places. x to X
Decision on transfer pricing Materials used by the Instrument Division of XPort Industries are currently purchased from outside suppliers at a cost of $249 per unit. However, the same materials are available from the Components Division. The Components Division has unused capacity and can produce the materials needed by the Instrument Division at a variable cost of $207 per unit. Assume that a transfer price of $237 has been established and that 25,200 units of materials are transferred, with no reduction in the Components Division’s current sales. a. How much would XPort Industries’ total income from operations increase?$fill in the blank 1 b. How much would the Instrument Division’s income from operations increase?$fill in the blank 2 c. How much would the Components Division’s income from operations increase?$fill in the blank 3 d. Any transfer price will cause the total income of the company to increase , as long as the supplier division capacity is used toward making…
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Materials used by the Instrument Division of T_Kong Industries are currently purchased from outside suppliers at a cost of $175 per unit. However, the same materials are available from the Components Division. The Components Division has unused capacity and can produce the materials needed by the Instrument Division at a variable cost of $122 per unit. a. If a transfer price of $148 per unit is established and 50,000 units of materials are transferred, with no reduction in the Components Division’s current sales, how much would T_Kong Industries’ total income from operations increase? b. How much would the Instrument Division's income from operations increase? c. How much would the Components Division's income from operations increase?
Materials used by Best Bread Company in producing Division A's product are currently purchased from outside suppliers at a cost of $30 per unit.However, the same materials are available from Division B.Division B has unused capacity and can produce the materials needed by Division A at a variable cost of $20 per unit. a If a transfer price of $25 per unit is established and 60,000 units of material are transferred, with no reductions in Division B's current sales, how much would Best Bread Company's total income from operations increase? b Assuming transfer price of $25 per unit is established and 60,000 units of material are transferred, with no reductions in Division B's current sales, how much would the income from operations of Division A increase? c Assuming transfer price of $25 per unit is established and 60,000 units of material are transferred, with no reductions in Division B's current sales, how much would the income from operations of Division B increase? d If the…
Transfer Pricing Wiring used by the Appliance Division of Childs Manufacturing is currently purchased from outside suppliers at a cost of $275 per unit. However, the same materials are available from the Electronic Division. The Electronic Division has unused capacity and can produce the materials needed by the Appliance Division at a variable cost of $228 per unit. Assume that a transfer price of $261 has been established and that 23,800 units of materials are transferred, with no reduction in the Electronic Division's current sales. a. How much would Childs Manufacturing's total operating income increase? $fill in the blank 1 b. How much would the Appliance Division's operating income increase? $fill in the blank 2 c. How much would the Electronic Division's operating income increase? $fill in the blank 3 d. If the negotiated price approach is used, what would be the range of acceptable transfer prices and why?

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