(a) Concept introduction: In the Transfer Pricing, one unit is transferred from one department to another department. The price of transferred unit is decided through Company's polices. For example: - cost plus margin, fixed price, variable cost etc. To compute: The operating income increased of Kaufman Manufacturing if Department quoted price $23

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Answer 1

Question

Chapter 14, Problem 14.17E

To determine

(a)

Concept introduction:

In the Transfer Pricing, one unit is transferred from one department to another department. The price of transferred unit is decided through Company's polices. For example: - cost plus margin, fixed price, variable cost etc.

To compute:

The operating income increased of Kaufman Manufacturing if Department quoted price $23

To determine

(b)

Concept introduction:

In the Transfer Pricing, one unit is transferred from one department to another department. The price of transferred unit is decided through Company's polices. For example: - cost plus margin, fixed price, variable cost etc.

To compute:

The operating income increased of appliance division.

To determine

(c)

Concept introduction:

In the Transfer Pricing, one unit is transferred from one department to another department. The price of transferred unit is decided through Company's polices. For example: - cost plus margin, fixed price, variable cost etc.

To compute:

The operating income increased of electronic division.

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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?

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?

Decision on Transfer Pricing Materials used by the Instrument Division of XPort Industries are currently purchased from outside suppliers at a cost of $193 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 $160 per unit. a. If a transfer price of $176 per unit is established and 27,900 units of materials are transferred, with no reduction in the Components Division's current sales, how much would XPort Industries’ total income from operations increase?$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

Answer 2

Question

Chapter 14, Problem 14.17E

To determine

(a)

Concept introduction:

In the Transfer Pricing, one unit is transferred from one department to another department. The price of transferred unit is decided through Company's polices. For example: - cost plus margin, fixed price, variable cost etc.

To compute:

The operating income increased of Kaufman Manufacturing if Department quoted price $23

To determine

(b)

Concept introduction:

In the Transfer Pricing, one unit is transferred from one department to another department. The price of transferred unit is decided through Company's polices. For example: - cost plus margin, fixed price, variable cost etc.

To compute:

The operating income increased of appliance division.

To determine

(c)

Concept introduction:

In the Transfer Pricing, one unit is transferred from one department to another department. The price of transferred unit is decided through Company's polices. For example: - cost plus margin, fixed price, variable cost etc.

To compute:

The operating income increased of electronic division.

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Answer 3

Question

Chapter 14, Problem 14.17E

To determine

(a)

Concept introduction:

In the Transfer Pricing, one unit is transferred from one department to another department. The price of transferred unit is decided through Company's polices. For example: - cost plus margin, fixed price, variable cost etc.

To compute:

The operating income increased of Kaufman Manufacturing if Department quoted price $23

To determine

(b)

Concept introduction:

In the Transfer Pricing, one unit is transferred from one department to another department. The price of transferred unit is decided through Company's polices. For example: - cost plus margin, fixed price, variable cost etc.

To compute:

The operating income increased of appliance division.

To determine

(c)

Concept introduction:

In the Transfer Pricing, one unit is transferred from one department to another department. The price of transferred unit is decided through Company's polices. For example: - cost plus margin, fixed price, variable cost etc.

To compute:

The operating income increased of electronic division.

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Answer 4

Question

Chapter 14, Problem 14.17E

To determine

(a)

Concept introduction:

In the Transfer Pricing, one unit is transferred from one department to another department. The price of transferred unit is decided through Company's polices. For example: - cost plus margin, fixed price, variable cost etc.

To compute:

The operating income increased of Kaufman Manufacturing if Department quoted price $23

To determine

(b)

Concept introduction:

In the Transfer Pricing, one unit is transferred from one department to another department. The price of transferred unit is decided through Company's polices. For example: - cost plus margin, fixed price, variable cost etc.

To compute:

The operating income increased of appliance division.

To determine

(c)

Concept introduction:

In the Transfer Pricing, one unit is transferred from one department to another department. The price of transferred unit is decided through Company's polices. For example: - cost plus margin, fixed price, variable cost etc.

To compute:

The operating income increased of electronic division.

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Answer 5

Chapter 14, Problem 14.17E

To determine

(a)

Concept introduction:

In the Transfer Pricing, one unit is transferred from one department to another department. The price of transferred unit is decided through Company's polices. For example: - cost plus margin, fixed price, variable cost etc.

To compute:

The operating income increased of Kaufman Manufacturing if Department quoted price $23

To determine

(b)

Concept introduction:

In the Transfer Pricing, one unit is transferred from one department to another department. The price of transferred unit is decided through Company's polices. For example: - cost plus margin, fixed price, variable cost etc.

To compute:

The operating income increased of appliance division.

To determine

(c)

Concept introduction:

In the Transfer Pricing, one unit is transferred from one department to another department. The price of transferred unit is decided through Company's polices. For example: - cost plus margin, fixed price, variable cost etc.

To compute:

The operating income increased of electronic division.

Answer 6

Chapter 14, Problem 14.17E

To determine

(a)

Concept introduction:

In the Transfer Pricing, one unit is transferred from one department to another department. The price of transferred unit is decided through Company's polices. For example: - cost plus margin, fixed price, variable cost etc.

To compute:

The operating income increased of Kaufman Manufacturing if Department quoted price $23

Answer 7

Chapter 14, Problem 14.17E

To determine

(a)

Concept introduction:

In the Transfer Pricing, one unit is transferred from one department to another department. The price of transferred unit is decided through Company's polices. For example: - cost plus margin, fixed price, variable cost etc.

To compute:

The operating income increased of Kaufman Manufacturing if Department quoted price $23

Answer 8

To determine

(b)

Concept introduction:

In the Transfer Pricing, one unit is transferred from one department to another department. The price of transferred unit is decided through Company's polices. For example: - cost plus margin, fixed price, variable cost etc.

To compute:

The operating income increased of appliance division.

Answer 9

To determine

(b)

Concept introduction:

In the Transfer Pricing, one unit is transferred from one department to another department. The price of transferred unit is decided through Company's polices. For example: - cost plus margin, fixed price, variable cost etc.

To compute:

The operating income increased of appliance division.

Answer 10

To determine

(c)

Concept introduction:

In the Transfer Pricing, one unit is transferred from one department to another department. The price of transferred unit is decided through Company's polices. For example: - cost plus margin, fixed price, variable cost etc.

To compute:

The operating income increased of electronic division.

Answer 11

To determine

(c)

Concept introduction:

In the Transfer Pricing, one unit is transferred from one department to another department. The price of transferred unit is decided through Company's polices. For example: - cost plus margin, fixed price, variable cost etc.

To compute:

The operating income increased of electronic division.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 14 - When the manager has the responsibility and...Ch. 14 - The Accounts Payable Department has expenses of...Ch. 14 - Division A of Kern Co. has sales of $350,000, cost...Ch. 14 - Division L of Liddy Co. has a return on investment...Ch. 14 - Which approach to transfer pricing uses the price...Ch. 14 - Prob. 1CDQ Ch. 14 - Prob. 2CDQ Ch. 14 - Prob. 3CDQ Ch. 14 - Prob. 4CDQ Ch. 14 - Weyerhaeuser developed a system that assigns...

Solution Summary: The author explains that in the Transfer Pricing, one unit is transferred from one department to another department. The price is decided through Company's polices.

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Chapter 14 Solutions