Atascadero Industries operates a Manufacturing Division and a Marketing Division. Both divisions are evaluated as profit centers. Marketing buys products from Manufacturing and packages them for sale. Manufacturing sells many components to third parties in addition to Marketing. Selected data from the two operations follow. Manufacturing Marketing 1,020, 000 Capacity (units) 502, 000 Sales pricea Variable costs Fixed costs 1, 500 $4 4, 650 24 580 $ 1, 720 $10, 200, 000 $7,220, 000 a For Manufacturing, this is the price to third parties. For Marketing, this does not include the transfer price paid to Manufacturing. Suppose Manufacturing is located in Country X with a tax rate of 70 percent and Marketing in Country Y with a tax rate of 30 percent. All other facts remain the same. Required: a. Current production levels in Manufacturing are 520,000 units. Marketing requests an additional 120,000 units to produce a special order. What transfer price would you recommend? b. Suppose Manufacturing is operating at full capacity. What transfer price would you recommend? c. Suppose Manufacturing is operating at 922,000 units. What transfer price would you recommend? (Round your answer to the nearest whole dollar.) a. Transfer price b. Transfer price per unit per unit C. Transfer price per unit < Prev 10 of 22 Next >
Atascadero Industries operates a Manufacturing Division and a Marketing Division. Both divisions are evaluated as profit centers. Marketing buys products from Manufacturing and packages them for sale. Manufacturing sells many components to third parties in addition to Marketing. Selected data from the two operations follow. Manufacturing Marketing 1,020, 000 Capacity (units) 502, 000 Sales pricea Variable costs Fixed costs 1, 500 $4 4, 650 24 580 $ 1, 720 $10, 200, 000 $7,220, 000 a For Manufacturing, this is the price to third parties. For Marketing, this does not include the transfer price paid to Manufacturing. Suppose Manufacturing is located in Country X with a tax rate of 70 percent and Marketing in Country Y with a tax rate of 30 percent. All other facts remain the same. Required: a. Current production levels in Manufacturing are 520,000 units. Marketing requests an additional 120,000 units to produce a special order. What transfer price would you recommend? b. Suppose Manufacturing is operating at full capacity. What transfer price would you recommend? c. Suppose Manufacturing is operating at 922,000 units. What transfer price would you recommend? (Round your answer to the nearest whole dollar.) a. Transfer price b. Transfer price per unit per unit C. Transfer price per unit < Prev 10 of 22 Next >
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing
Section: Chapter Questions
Problem 30P
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Question
Transcribed Image Text:Atascadero Industries operates a Manufacturing Division and a Marketing Division. Both divisions are evaluated as profit centers.
Marketing buys products from Manufacturing and packages them for sale. Manufacturing sells many components to third parties in
addition to Marketing. Selected data from the two operations follow.
Manufacturing Marketing
1,020,000
%24
Capacity (units)
sales price
variable costs
Fixed costs
502,000
1,500
4,650
$4
580
1,720
$10,200, 000
$7,220, 000
a.
For Manufacturing, this is the price to third partles.
For Marketing, this does not include the transfer price paid to Manufacturing.
Suppose Manufacturing is located in Country X with a tax rate of 70 percent and Marketing in Country Y with a tax rate of 30 percent.
All other facts remain the same,
Requlred:
a. Current production levels in Manufacturing are 520,000 units. Marketing requests an additional 120.000 units to produce a speclal
order. What transfer price would youu recommend?
b. Suppose Manufacturing is operating at full capacity. What transfer price would you recommend?
c. Suppose Manufacturing is operating at 922,000 units. What transfer price would you recommend? (Round your answer to the
nearest whole dollar.)
a. Transfer price
per unit
b. Transfer price
per unit
c. Transfer price
per unit
< Prey
10 of 22
Next
%24
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