Branzini, Inc. has two divisions, Nord and Sud, the revenues of which constitute $60,000,000 and $20,000,000 accordingly. If the rental costs of Branzini are $2,000,000, each of the two divisions should be charged $1,000,000. Select one: True False
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Branzini, Inc. has two divisions, Nord and Sud, the revenues of which constitute $60,000,000 and $20,000,000 accordingly. If the rental costs of Branzini are $2,000,000, each of the two divisions should be charged $1,000,000.
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- Bartolo Delivery has two divisions, air express and ground service, that share the common costs of the company's communications network, which are $8,200,000 a year. You have the following information about the two divisions and the common communications network. Air express Ground service Required A Calls (thousands) 581,000 249,000 Required: a. What is the communications network cost that is charged to each division of the number of calls is used as the allocation basis? b. What is the communications network cost to each division using time on network as the allocation basis? Complete this question by entering your answers in the tabs below. Division Air express Ground service Time on Network (hours) Required B 362,500 1,087,500 What is the communications network cost that is charged to each division if the number of calls is used as the allocation basis? (Do not round intermediate calculations.) Network CostSpark Ltd has two divisions, assembly and electrical. The assembly division transfers partially completed components to the electrical division at a predetermined transfer price. The assembly division’s standard variable production cost per unit is $550. This division has spare capacity, and itcould sell all its components to outside buyers at $680 per unit in a perfectly competitive market.Required:a) Determine a transfer price using the general rule.b) How would the transfer price change if the assembly division had no spare capacity?c) What transfer price would you recommend if there was no outside market for the transferred component and the assembly division had spare capacity?d) Explain how negotiation between the supplying and buying units may be used to set transfer prices. How does this relate to the general transfer pricing rule?Bartolo Delivery has two divisions, air express and ground service, that share the common costs of the company’s communications network, which are $8,300,000 a year. You have the following information about the two divisions and the common communications network. Calls (thousands) Time on Network (hours) Air express 511,000 347,500 Ground service 219,000 1,042,500 Required: What is the communications network cost that is charged to each division if the number of calls is used as the allocation basis? What is the communications network cost to each division using time on network as the allocation basis?
- Spark Ltd has two divisions, assembly and electrical. The assembly division transfers partially completed components to the electrical division at a predetermined transfer price. The assembly division’s standard variable production cost per unit is $550. This division has spare capacity, and it could sell all its components to outside buyers at $680 per unit in a perfectly competitive market. Required: a) Determine a transfer price using the general rule. b) How would the transfer price change if the assembly division had no spare capacity? c) What transfer price would you recommend if there was no outside market for the transferred component and the assembly division had spare capacity? d) Explain how negotiation between the supplying and buying units may be used to set transfer prices. How does this relate to the general transfer pricing rule? (\ maximum 200 words)Bartolo Delivery has two divisions, air express and ground service, that share the common costs of the company’s communications network, which are $8,500,000 a year. You have the following information about the two divisions and the common communications network. Calls (thousands) Time on Network (hours) Air express 553,000 337,500 Ground service 237,000 1,012,500 Required: a. What is the communications network cost that is charged to each division if the number of calls is used as the allocation basis? b. What is the communications network cost to each division using time on network as the allocation basis?Quest Motors, Inc., operates as a decentralized multidivision company. The Vivo division of Quest Motors purchases most of its airbags from the airbag division. The airbag division’s incremental cost for manufacturing the airbags is $90 per unit. The airbag division is currently working at 80% of capacity. The current market price of the airbags is $125 per unit. Q. If the two divisions were to negotiate a transfer price, what is the range of possible transfer prices? Evaluate this negotiated transfer-pricing policy using the criteria of goal congruence, evaluating division performance, motivating management effort, and preserving division autonomy.
- Wattle Limited has two divisions: Industry and Consumer. The Industry Division transfers partially completed components to the Consumer Division at a predetermined transfer price. The Industry Division’s standard variable production cost per unit is $500. This division could sell all its components to outside buyers at $650 per unit in a perfectly competitive market. The Consumer Division has a special offer of $740 for its product. The Consumer Division incurs variable costs of $260 in addition to the transfer price for the Industry Division’s components. Both Industry and Consumer divisions currently have spare production capacity. Required: a) Determine a transfer price using the general transfer pricing rule. ) b) Assume that the transfer price has been set at $530, is the Consumer Division manager likely to want to accept or reject the special offer? Why? c) Is the decision in the best interests of Wattle Limited as a whole? Explain.Please show work: The Heating Division of Pronghorn International produces a heating element that it sells to its customers for $46 per unit. Its unit variable cost is $26, and its unit fixed cost is $6. Top management of Pronghorn International would like the Heating Division to transfer 14,600 heating units to another division within the company at a price of $27. Assume that the Heating Division has sufficient excess capacity to provide the 14,600 heating units to the other division. What is the minimum transfer price that the Heating Division should accept? Minimum transfer price $S Inc. has two divisions Alpha division and Beta division. Alpha is selling a unit at $60. Its full manufacturing cost is $40 per unit. The final product of Alpha division is one of the products used by Beta division. Beta division can buy the product from outside market at $55 per unit. However, since Alpha division has available spare capacity to fulfil the requirements of Beta division, the divisions have decided to opt for inter-divisional transfer. The managers of both divisions are negotiating over the transfer price. What maximum transfer price will the manager of Beta division accept? a. $55. b. $60. c. $70. d. $100.
