Accounting (Text Only)
26th Edition
ISBN: 9781285743615
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Question
Chapter 24, Problem 24.6BPR
(1)
To determine
Transfer price: The price charged for the goods and services transferred among the divisions is referred to as transfer price.
Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.
To indicate: If the market price be the appropriate transfer price for Company E
(2)
To determine
The increase in S Division, NS Division, and Company E income from operations as a result of transfer pricing
(3)
To determine
To prepare: The income statements for S and NS Divisions of Company E for the year ended December 31, 2016
(4)
To determine
The increase in S Division, NS Division, and Company E income from operations as a result of transfer pricing
(5) (a)
To determine
The range of transfer price, if negotiated price approach is used
(b)
To determine
To suggest: The transfer price
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Garcon Inc. manufactures electronic products, with two operating divisions, Consumer and Commercial. Condensed divisional income statements, which involve no intracompany transfers and which include a breakdown of expenses into variable and fixed components, are as follows:
(refer to pic)
2.
If the Commercial Division purchases 2,880 units from the Consumer Division, rather than externally, at a negotiated transfer price of $115 per unit, how much would the income from operations of each division and the total company income from operations increase?
3.
Prepare condensed divisional income statements for Garcon Inc. based on the data in Requirement 2.
4.
If a transfer price of $126 per unit is negotiated, how much would the income from operations of each division and the total company income from operations increase?
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The markup in the full cost arrangement is left to the discretion of divisional managers. The managers of the two division held a meeting to discuss on the pricing arrangement for a mini- antennae produced by the component division. Production of the mini-antennae is currently at full capacity. The Component Division can sell the mini-antennae for RM 46.50 to outside customers. The Equipment Division can also buy the mini-antennae from external sources for the same price. The manager of the…
Cable Network System Bhd (CNS) is a supplier of equipment to telecommunication companies such as Maxis, Celcom and Astro. It has two division, Component Division and the Equipment Division. CNS adopts a decentralized management system where managers are essentially free to determine whether goods will be transferred internally and what would be the internal transfer prices. CNS policy is that for all internal transfers between divisions, the transfer price be expressed on a full cost basis.
The markup in the full cost arrangement is left to the discretion of divisional managers. The managers of the two division held a meeting to discuss on the pricing arrangement for a mini- antennae produced by the component division. Production of the mini-antennae is currently at full capacity. The Component Division can sell the mini-antennae for RM 46.50 to outside customers. The Equipment Division can also buy the mini-antennae from external sources for the same price. The manager of the…
Chapter 24 Solutions
Accounting (Text Only)
Ch. 24 - Differentiate between centralized and...Ch. 24 - Differentiate between a profit center and an...Ch. 24 - Prob. 3DQCh. 24 - What is the major shortcoming of using income from...Ch. 24 - In a decentralized company in which the divisions...Ch. 24 - How does using the return on investment facilitate...Ch. 24 - Why would a firm use a balanced scorecard in...Ch. 24 - What is the objective of transfer pricing?Ch. 24 - When is the negotiated price approach preferred...Ch. 24 - When using the negotiated price approach to...
Ch. 24 - Budgetary performance for cost center Caroline...Ch. 24 - Budgetary performance for cost center Conley...Ch. 24 - Prob. 24.2APECh. 24 - Prob. 24.2BPECh. 24 - Prob. 24.3APECh. 24 - Prob. 24.3BPECh. 24 - Profit margin, investment turnover, and ROI Cash...Ch. 24 - Profit margin, investment turnover and ROI Briggs...Ch. 24 - Prob. 24.5APECh. 24 - Residual income The Commercial Division of Herring...Ch. 24 - Transfer pricing The materials used by the North...Ch. 24 - Transfer pricing The materials used by the...Ch. 24 - Budget performance reports for cost centers...Ch. 24 - Prob. 24.2EXCh. 24 - Prob. 24.3EXCh. 24 - Prob. 24.4EXCh. 24 - Service department charges In divisional income...Ch. 24 - Service department charges and activity bases...Ch. 24 - Divisional income statements with service...Ch. 24 - Prob. 24.8EXCh. 24 - Profit center responsibility reporting XSport...Ch. 24 - Rate of return on investment The income from...Ch. 24 - Prob. 24.11EXCh. 24 - Determining missing items in return computation...Ch. 24 - Profit margin, investment turnover, and rate of...Ch. 24 - Prob. 24.14EXCh. 24 - Determining missing items in return and residual...Ch. 24 - Determining missing items from computations Data...Ch. 24 - Prob. 24.17EXCh. 24 - Balanced scorecard for a service company American...Ch. 24 - Building a balanced scorecard Hit-n-Kun Inc. owns...Ch. 24 - Decision on transfer pricing Materials used by the...Ch. 24 - Prob. 24.21EXCh. 24 - Budget performance report for a cost center...Ch. 24 - Prob. 24.2APRCh. 24 - Prob. 24.3APRCh. 24 - Effect of proposals on divisional performance A...Ch. 24 - Divisional performance analysis and evaluation The...Ch. 24 - Prob. 24.6APRCh. 24 - Budget performance report for a cost center The...Ch. 24 - Prob. 24.2BPRCh. 24 - Prob. 24.3BPRCh. 24 - Effect of proposals on divisional performance A...Ch. 24 - Divisional performance analysis and evaluation The...Ch. 24 - Prob. 24.6BPRCh. 24 - Prob. 24.1CPCh. 24 - Prob. 24.2CPCh. 24 - Evaluating divisional performance The three...Ch. 24 - Prob. 24.4CPCh. 24 - Evaluating division performance Last Resort...
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