Wetherald Products, Incorporated, has a Pump Division that manufactures and sells a number of products, including a standard pump that could be used by another division in the company, the Pool Products Division, in one of its products. Data concerning that pump appear below: Capacity in units 55,000 Selling price to outside customers $82 Variable cost per unit $ 53 Fixed cost per unit (based on capacity) $11 The Pool Products Division is currently purchasing 4,000 of these pumps per year from an overseas supplier at a cost of $74 per pump. Assume that the Pump Division has enough idle capacity to handle all of the Pool Products Division's needs. What should be the minimum acceptable transfer price for the pumps from the standpoint of the Pump Division? Multiple Choice $74 per unit $53 per unit $64 per unit $82 per unit
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- Zumsteg Products, Incorporated, has a Pump Division that manufactures and sells a number of products, including a standard pump. Date concerning that pump appear below: Capacity in units Selling price to outside customers Variable cost per unit Fixed cost per unit (based on capacity) 72,800 #106 70.0 $20 The company has a Pool Products Division that could use this pump in one of its products. The Pool Products Division is currently purchasing 8,800 of these pumps per year from an overseas supplier at a cost of $99 per pump. Required: Assume that the Pump Division has enough Idle capacity to handle all of the Pool Products Division's needs. What is the acceptable ange, If any, for the transfer price between the two divisions? Note: Round your answers to 1 decimal place.Germano Products, Incorporated, has a Pump Division that manufactures and sells a number of products, including a standard pump that could be used by another division in the company, the Pool Products Division, in one of its products. Data concerning that pump appear below: Capacity in units 70,000 Selling price to outside customers $ 77 Variable cost per unit $ 27 Fixed cost per unit (based on capacity) $ 31 The Pool Products Division is currently purchasing 16,000 of these pumps per year from an overseas supplier at a cost of $72 per pump. Assume that the Pump Division is selling all of the pumps it can produce to outside customers. Does there exist a transfer price that would make both the Pump and Pool Products Division financially better off than if the Pool Products Division were to continue buying its pumps from the outside supplier? Multiple Choice Yes, both divisions are always better off regardless of whether the selling division has enough idle…Collyer Products Inc. has a Valve Division that manufactures and sells a standard valve as follows: Capacity in units Selling price to outside customers on the intermediate market Variable costs per unit Fixed costs per unit (based on capacity) 10,000 15 8 5 The company has a Pump Division that could use this valve in the manufacture of one of its pumps. The Pump Division is currently purchasing 10,000 valves per year from an overseas supplier at a cost of $14 per valve. 3. Assume again that the Valve Division is selling all that it can produce to outside customers on the intermediate market. Also assume that $2 in variable expenses can be avoided on transfers within the company, due to reduced selling costs. What is the acceptable range, if any, for the transfer price between the two divisions? Transfer price 4. Assume the Pump Division needs 20,000 special high-pressure valves per year. The Valve Division's variable costs to manufacture and ship the special valve would be $10 per…
- 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 CostBartolo Delivery has two divisions, air express and ground service, that share the common costs of the company's communications network, which are $8,400,000 a year. You have the following information about the two divisions and the common communications network. Air express Ground service Calls (thousands) 504,000 216,000 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? Complete this question by entering your answers in the tabs below. Required A Required B Division Time on Network (hours) 350,000 1,050,000 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.) Air express Ground service Network CostCollier Products, Inc. has a Valve Division that manufactures and Sells a standard valve with the following information: Description of Valve Division's Production Amount Capacity in Units 100,000 Selling Price Per Unit 60 Variable Costs Per Unit 26 Variable Selling Expenses Per Unit 6 Fixed Costs Per Unit (Based on Capacity) 18 Collier has a Pump Division that could use the Valve in one of its pumps. Valves (per yr.) the Pump Division is currently purchasing: 10,000 Pump Division cost of each Valve from Overseas Supplier: 58 Refer to the original data about Collier Products, Inc. Assume that the Pump Division needs SPECIAL, (not Standard), High Pressure Valves per year. Quantity = 20,000 The Valve Division's variable cost to Manufacture & Ship the Special Value (per unit). No Variable Selling Costs will be incurred. 40 To Produce the SPEACIAL VALVES, the Valve Division…
- Sako Company’s Audio Division produces a speaker that is used by manufacturers of various audio products. Sales and cost data on the speaker follow:Selling price per unit on the intermediate market $ 80Variable costs per unit $ 62Fixed costs per unit (based on capacity) $ 8Capacity in units 25,000 Sako Company has a Hi-Fi Division that could use this speaker in one of its products. The Hi-Fi Division will need 5,000 speakers per year. It has received a quote of $77 per speaker from another manufacturer. Sako Company evaluates division managers on the basis of divisional profits.Required: 1. Assume the Audio Division is selling 22,500 speakers per year to outside customers. A. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hi-Fi Division? B. From the standpoint of the Hi-Fi Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division? C. What is the…Collyer Products Inc. has a Valve Division that manufactures and sells a standard valve as follows: Capacity in units 10,000 Selling price to outside customers on the intermediate market $ 15 Variable costs per unit $ 8 Fixed costs per unit (based on capacity) $ 5 The company has a Pump Division that could use this valve in the manufacture of one of its pumps. The Pump Division is currently purchasing 10,000 valves per year from an overseas supplier at a cost of $14 per valve. Required:1. Assume that the Valve Division has ample idle capacity to handle all of the Pump Division's needs. What is the acceptable range, if any, for the transfer price between the two divisions? 2. Assume that the Valve Division is selling all that it can produce to outside customers on the intermediate market. What is the minimum transfer price acceptable to the Valve Division for transfers to the Pump Division? 3. Assume again that the Valve Division is selling all that it can…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. Suppose that Quest Motors requires that whenever divisions with unused capacity sell products internally, they must do so at the incremental cost. Evaluate this transfer-pricing policy using the criteria of goal congruence, evaluating division performance, motivating management effort, and preserving division autonomy
- 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. Using the general guideline presented in the chapter, what is the minimum price at which the airbag division would sell airbags to the Vivo division?Pharoah International Corporation has two divisions, beta and gamma. Beta produces an electronic component that sells for $75 per unit, with the following costs based on its capacity of 217,600 units: Direct materials Direct labour $23 18 Variable overhead 4 Fixed overhead 11 Beta is operating at 79% of normal capacity and gamma is purchasing 17,000 units of the same component from an outside supplier for $69 per unit. (a) Your Answer Correct Answer (Used) Calculate the benefit, if any, to beta in selling to gamma 17,000 units at the outside supplier's price. Benefit $ 24 per unit Calculate the lowest price beta would be willing to accept. Lowest price $The Dodson Company manufactures and distríbutes three types of electronic products, Zymol, Zybat and Zycot. The following details the unit sales, selling prices and manufacturing costs of the three electronic devices: Zymol $100 Zybat $120 Zycot $180 Sales Price Manufacturing Cost $60 $80 $110 Number ofunits sold 15,000 13,000 12,000 Selling, general and administrative(SG&A) expenses are $1,170,000. SG&Aexpenses are currently being allocated based upon sales revenue for the three products. The Dodson Companyis considering allocating SG&A expenses underan activity based costing methodology as follows: Upon further investigation of the SG&A expenses, (50 percent) are shown to be for marketing and advertising. Each product has its own advertising and marketing budget, administered by one of the three marketing managers. Zycot, the premier product, is advertisedheavily. Sixty percent of the marketing and advertising budget goes toward Zycot, twenty percent to Zymol and twenty percent to…