Exoplex Industries Inc. Divisional Income Statements For the Year Ended December 31, 20Y8 Semiconductors Division Navigational Systems Division Total Sales: 2,240 units @ $396 per unit $887,040 $887,040 3,675 units @ $590 per unit $2,168,250 2,168,250 $887,040 $2,168,250 $3,055,290 Expenses: Variable: 2,240 units @ $232 per unit $519,680 $519,680 3,675 units @ $472* per unit $1,734,600 1,734,600 Fixed 220,000 325,000 545,000 Total expenses $739,680 $2,059,600 $2,799,280 Income from operations $147,360 $108,650 $256,010 *$432 of the $472 per unit represents materials costs, and the remaining $40 per unit represents other variable conversion expenses incurred within the Navigational Systems Division. The Semiconductors Division is presently producing 2,240 units out of a total capacity of 2,820 units. Materials used in producing the Navigational Systems Division's product are currently purchased from outside suppliers at a price of $432 per unit. The Semiconductors Division is able to produce the components used by the Navigational Systems Division. Except for the possible transfer of materials between divisions, no changes are expected in sales and expenses. Required: Question Content Area 1. Would the market price of $432 per unit be an appropriate transfer price for Exoplex Industries Inc.? 2. If the Navigational Systems Division purchased 580 units from the Semiconductors Division, rather than externally, at a negotiated transfer price of $310 per unit, how much would the income from operations of each division and total company income from operations increase? The Semiconductors Division's income from operations would increase by $fill in the blank 512c88fa3020f86_2 The Navigational Systems Division's income from operations would increase by $fill in the blank 512c88fa3020f86_3 Exoplex Industries Inc.'s total income from operations would increase by $fill in the blank 512c88fa3020f86_4 Question Content Area 3. Prepare condensed divisional income statements for Exoplex Industries Inc. based on the data in part (2). Exoplex Industries Inc.Divisional Income StatementsFor the Year Ended December 31, 20Y8 Semiconductors Navigational Systems Total Sales: 2,240 units $fill in the blank 6e4f8601fffd039_1 $fill in the blank 6e4f8601fffd039_2 580 units fill in the blank 6e4f8601fffd039_3 fill in the blank 6e4f8601fffd039_4 3,675 units $fill in the blank 6e4f8601fffd039_5 fill in the blank 6e4f8601fffd039_6 Total sales $fill in the blank 6e4f8601fffd039_7 $fill in the blank 6e4f8601fffd039_8 $fill in the blank 6e4f8601fffd039_9 Expenses: Variable: 2,820 units $fill in the blank 6e4f8601fffd039_10 $fill in the blank 6e4f8601fffd039_11 580 units $fill in the blank 6e4f8601fffd039_12 fill in the blank 6e4f8601fffd039_13 3,095 units fill in the blank 6e4f8601fffd039_14 fill in the blank 6e4f8601fffd039_15 Fixed fill in the blank 6e4f8601fffd039_16 fill in the blank 6e4f8601fffd039_17 fill in the blank 6e4f8601fffd039_18 Total expenses $fill in the blank 6e4f8601fffd039_19 $fill in the blank 6e4f8601fffd039_20 $fill in the blank 6e4f8601fffd039_21 Income from operations $fill in the blank 6e4f8601fffd039_
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
| Exoplex Industries Inc. Divisional Income Statements For the Year Ended December 31, 20Y8 |
||||||
| Semiconductors Division |
Navigational Systems Division |
Total | ||||
| Sales: | ||||||
| 2,240 units @ $396 per unit | $887,040 | $887,040 | ||||
| 3,675 units @ $590 per unit | $2,168,250 | 2,168,250 | ||||
| $887,040 | $2,168,250 | $3,055,290 | ||||
| Expenses: | ||||||
| Variable: | ||||||
| 2,240 units @ $232 per unit | $519,680 | $519,680 | ||||
| 3,675 units @ $472* per unit | $1,734,600 | 1,734,600 | ||||
| Fixed | 220,000 | 325,000 | 545,000 | |||
| Total expenses | $739,680 | $2,059,600 | $2,799,280 | |||
| Income from operations | $147,360 | $108,650 | $256,010 | |||
|
*$432 of the $472 per unit represents materials costs, and the remaining $40 per unit represents other variable conversion expenses incurred within the Navigational Systems Division. |
The Semiconductors Division is presently producing 2,240 units out of a total capacity of 2,820 units. Materials used in producing the Navigational Systems Division's product are currently purchased from outside suppliers at a price of $432 per unit. The Semiconductors Division is able to produce the components used by the Navigational Systems Division. Except for the possible transfer of materials between divisions, no changes are expected in sales and expenses.
Required:
Question Content Area
1. Would the market price of $432 per unit be an appropriate transfer price for Exoplex Industries Inc.?
2. If the Navigational Systems Division purchased 580 units from the Semiconductors Division, rather than externally, at a negotiated transfer price of $310 per unit, how much would the income from operations of each division and total company income from operations increase?
The Semiconductors Division's income from operations would increase by
$fill in the blank 512c88fa3020f86_2
The Navigational Systems Division's income from operations would increase by
$fill in the blank 512c88fa3020f86_3
Exoplex Industries Inc.'s total income from operations would increase by
$fill in the blank 512c88fa3020f86_4
Question Content Area
3. Prepare condensed divisional income statements for Exoplex Industries Inc. based on the data in part (2).
| Semiconductors | Navigational Systems | Total | |
| Sales: | |||
| 2,240 units | $fill in the blank 6e4f8601fffd039_1 | $fill in the blank 6e4f8601fffd039_2 | |
| 580 units | fill in the blank 6e4f8601fffd039_3 | fill in the blank 6e4f8601fffd039_4 | |
| 3,675 units | $fill in the blank 6e4f8601fffd039_5 | fill in the blank 6e4f8601fffd039_6 | |
| Total sales | $fill in the blank 6e4f8601fffd039_7 | $fill in the blank 6e4f8601fffd039_8 | $fill in the blank 6e4f8601fffd039_9 |
| Expenses: | |||
| Variable: | |||
| 2,820 units | $fill in the blank 6e4f8601fffd039_10 | $fill in the blank 6e4f8601fffd039_11 | |
| 580 units | $fill in the blank 6e4f8601fffd039_12 | fill in the blank 6e4f8601fffd039_13 | |
| 3,095 units | fill in the blank 6e4f8601fffd039_14 | fill in the blank 6e4f8601fffd039_15 | |
| Fixed | fill in the blank 6e4f8601fffd039_16 | fill in the blank 6e4f8601fffd039_17 | fill in the blank 6e4f8601fffd039_18 |
| Total expenses | $fill in the blank 6e4f8601fffd039_19 | $fill in the blank 6e4f8601fffd039_20 | $fill in the blank 6e4f8601fffd039_21 |
| Income from operations | $fill in the blank 6e4f8601fffd039_22 | $fill in the blank 6e4f8601fffd039_23 | $fill in the blank 6e4f8601fffd039_24 |
Question Content Area
4. If a transfer price of $340 per unit is negotiated, how much would the income from operations of each division and total company income from operations increase?
The Semiconductors Division's income from operations would increase by
$fill in the blank 75932002afef041_1
The Navigational Systems Division's income from operations would increase by
$fill in the blank 75932002afef041_2
Exoplex Industries Inc.'s total income from operations would increase by
$fill in the blank 75932002afef041_3
5a. What is the range of possible negotiated transfer prices that would be acceptable for Exoplex Industries Inc.?
Any transfer price
than the Semiconductors Division’s variable expenses per unit but
than the market price would be acceptable.
5b. Assuming that the managers of the two divisions cannot agree on a transfer price, what price would you suggest as the transfer price?
$fill in the blank 75932002afef041_6
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
4. If a transfer price of $340 per unit is negotiated, how much would the income from operations of each division and total company income from operations increase?
The Semiconductors Division's income from operations would increase by
$fill in the blank 75932002afef041_1
The Navigational Systems Division's income from operations would increase by
$fill in the blank 75932002afef041_2
Exoplex Industries Inc.'s total income from operations would increase by
$fill in the blank 75932002afef041_3
5a. What is the range of possible negotiated transfer prices that would be acceptable for Exoplex Industries Inc.?
Any transfer price
than the Semiconductors Division’s variable expenses per unit but
than the market price would be acceptable.
5b. Assuming that the managers of the two divisions cannot agree on a transfer price, what price would you suggest as the transfer price?
$fill in the blank 75932002afef041_6
by Bartleby Expert
