(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 $ 22 .

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Answer 1

Question

Chapter 14, Problem 14.18E

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 $22.

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, unit is transferred from one department to another department. The price of transferred unit is decided considering company polices. For example: - cost plus margin, fixed price, variable cost etc.

To compute:

The operating income increased of electronic division.

To determine

(d)

Concept introduction:

In the transfer pricing, unit is transferred from one department to another department. The price of transferred unit is decided consideringcompany polices. For example: - cost plus margin, fixed price, variable cost etc.

The range of acceptable transfer using the negotiated price approach and reasons for the same.

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Please answer last 3 subparts labeled d, e, f. D. What would be the effect on the ROI of the Tufting Division using your transfer price? Explain. E. Assume that the Backing Division is now selling 2,000,000 square yards per year to retail outlets. What transfer price would you recommend? What will be the effect on corporate profits? F. If the Backing Division is at capacity and decides to sell to the Tufting Division for $3.00 per square yard, what will be the effect on the company's profits?

Required Information [The following Information applies to the questions displayed below.] Megamart provides the following Information on its two Investment centers. Investment Center Electronics Sporting goods Sales $ 63,460,000 19,050,000 1. Compute return on Investment for each center. Using return on investment, which center is most efficient at using assets to generate Income? 2. Assume a target Income of 12% of average assets. Compute residual income for each center. Which center generated the most residual Income? 3. Assume the Electronics center is presented with a new Investment opportunity that will yield a 14% return on Investment. Should the new Investment opportunity be accepted? The target return is 12%. Complete this question by entering your answers in the tabs below. Numerator: Required 1 Required 2 Required 3 Compute return on investment for each center. Using return on investment, which center is most efficient at using assets to generate income? Income $ 3,173,000…

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

Answer 2

Question

Chapter 14, Problem 14.18E

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 $22.

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, unit is transferred from one department to another department. The price of transferred unit is decided considering company polices. For example: - cost plus margin, fixed price, variable cost etc.

To compute:

The operating income increased of electronic division.

To determine

(d)

Concept introduction:

In the transfer pricing, unit is transferred from one department to another department. The price of transferred unit is decided consideringcompany polices. For example: - cost plus margin, fixed price, variable cost etc.

The range of acceptable transfer using the negotiated price approach and reasons for the same.

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Answer 3

Question

Chapter 14, Problem 14.18E

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 $22.

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, unit is transferred from one department to another department. The price of transferred unit is decided considering company polices. For example: - cost plus margin, fixed price, variable cost etc.

To compute:

The operating income increased of electronic division.

To determine

(d)

Concept introduction:

In the transfer pricing, unit is transferred from one department to another department. The price of transferred unit is decided consideringcompany polices. For example: - cost plus margin, fixed price, variable cost etc.

The range of acceptable transfer using the negotiated price approach and reasons for the same.

Expert Solution & Answer

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Answer 4

Question

Chapter 14, Problem 14.18E

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 $22.

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, unit is transferred from one department to another department. The price of transferred unit is decided considering company polices. For example: - cost plus margin, fixed price, variable cost etc.

To compute:

The operating income increased of electronic division.

To determine

(d)

Concept introduction:

In the transfer pricing, unit is transferred from one department to another department. The price of transferred unit is decided consideringcompany polices. For example: - cost plus margin, fixed price, variable cost etc.

The range of acceptable transfer using the negotiated price approach and reasons for the same.

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Answer 5

Chapter 14, Problem 14.18E

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 $22.

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, unit is transferred from one department to another department. The price of transferred unit is decided considering company polices. For example: - cost plus margin, fixed price, variable cost etc.

To compute:

The operating income increased of electronic division.

To determine

(d)

Concept introduction:

In the transfer pricing, unit is transferred from one department to another department. The price of transferred unit is decided consideringcompany polices. For example: - cost plus margin, fixed price, variable cost etc.

The range of acceptable transfer using the negotiated price approach and reasons for the same.

Answer 6

Chapter 14, Problem 14.18E

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 $22.

Answer 7

Chapter 14, Problem 14.18E

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 $22.

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, unit is transferred from one department to another department. The price of transferred unit is decided considering company 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, unit is transferred from one department to another department. The price of transferred unit is decided considering company polices. For example: - cost plus margin, fixed price, variable cost etc.

To compute:

The operating income increased of electronic division.

Answer 12

To determine

(d)

Concept introduction:

In the transfer pricing, unit is transferred from one department to another department. The price of transferred unit is decided consideringcompany polices. For example: - cost plus margin, fixed price, variable cost etc.

The range of acceptable transfer using the negotiated price approach and reasons for the same.

Answer 13

To determine

(d)

Concept introduction:

In the transfer pricing, unit is transferred from one department to another department. The price of transferred unit is decided consideringcompany polices. For example: - cost plus margin, fixed price, variable cost etc.

The range of acceptable transfer using the negotiated price approach and reasons for the same.

Answer 14

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Answer 15

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Answer 16

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Answer 17

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 the concept of transfer pricing, where one unit is transferred from one department to another department.

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Chapter 14 Solutions