Division A produces a product that it sells to the outside market. It has compiled the following: Variable manufacturing cost per unit $9 Variable selling costs per unit $3 Total fixed manufacturing costs $144000 Total fixed selling costs $30000 Per unit selling price to outside buyers $42 Capacity in units per year 30000 Division B of the same company is currently buying an identical product from an outside provider for $39 per unit. It wishes to purchase 6000 units per year from Division A. Division A is currently selling 25000 units of the product per year. If the internal transfer is made, Division A will not incur any selling costs. What would be the minimum transfer price per unit that Division A would be willing to accept? $42.00 $9.00 $14.00

Division A has the capacity to produce 120,000 units. The normal selling price of each unit is P80. The variable cost incurred for each unit is P42. Total direct fixed cost for the relevant range is P1,150,000. Division B can use the products of Division A as an input in its manufacturing process but is currently acquiring the said products from an outside supplier. The price per unit is P75. Total annual demand is 30,000 units.   1. Assuming sufficient capacity, what is the minimum acceptable transfer price to Division A? 2. Assuming only 22,500 excess capacity, what is the minimum acceptable transfer price to Division A? 3. Assuming no excess capacity, what is the minimum acceptable transfer price to Division A? 4. What is the maximum acceptable transfer price to Division B?

Alpine Luggage has a capacity to produce 430,000 sultcases per year. The company is currently producing and selling 350,000 units per year at a selling price of $400 per case. The cost of producing and selling one case follows: Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Total costs Selling price per case Variable manufacturing costs Fixed manufacturing costs Variable selling and administrative costs Fixed selling and administrative costs Net profit (loss) per case The company has received a special order for 40,000 sultcases at a price of $249 per case. It will not have to pay any sales commission on the special order, so the variable selling and administrative costs would be only $52 per sultcase. The special order would have no effect on total fixed costs. The company has rejected the offer based on the following computations: Sales revenue Variable costs Manufacturing Selling and…

The process-control division expects to sell 1,250 process-control units this year. From the viewpoint of Sierra Inc. as a whole, should 1,250 Xcel-chips be transferred to the process-control division to replace circuit boards? Show your computations.

Division A has the capacity to produce 120,000 units. The normal selling price of each unit is P80. The variable cost incurred for each unit is P42. Total direct fixed cost for the relevant range is P1,150,000.  Division B can use the products of Division A as an input in its manufacturing process but is currently acquiring the said products from an outside supplier. The price per unit is P75. Total annual demand is 30,000 units. Assuming sufficient capacity, what is the minimum acceptable transfer price to Division A? Assuming only 22,500 excess capacity, what is the minimum acceptable transfer price to Division A? Assuming only 22,500 excess capacity and that Division A can avoid variable selling cost per unit of P4 but will incur a one-time fixed cost of P30,000 for the order, what is the minimum acceptable transfer price to Division A? Assuming no excess capacity, what is the minimum acceptable transfer price to Division A? What is the maximum acceptable transfer…

Rapid Industries has multiple divisions. One division, Iron Products, makes a component that another division, Austin, is currently purchasing on the open market. Iron Products currently has a capacity to produce 505,000 components at a variable cost of $5.50 and a full cost of $9.00. Iron Products has outside sales of 460,000 components at a price of $13.50 per unit. Austin currently purchases 55,000 units from an outside supplier at a price of $11.50 per unit. Assume that Austin desires to use a single supplier for its component. a. What will be the effect on Rapid Industries operating profit if the transfer is made internally? Assume the 55,000 units Austin needs are either purchased 100% internally or 100% externally b. What is the minimum transfer price? (Round your answer to 2 decimal places.) Minimum Transfer Price c. What is the maximum transfer price? (Round your answer to 2 decimal places.) Maximum Transfer Price 47

Colt Company owns a machine that can produce two specialized products. Production time for Product TLX is three units per hour and for Product MTV is five units per hour. The machine’s capacity is 2,600 hours per year. Both products are sold to a single customer who has agreed to buy all of the company’s output up to a maximum of 4,420 units of Product TLX and 5,995 units of Product MTV. Selling prices and variable costs per unit to produce the products follow.  $ per unit Product TLX Product MTV Selling price per unit   $ 11.50     $ 6.90   Variable costs per unit     3.45       4.14     Determine the company's most profitable sales mix and the contribution margin that results from that sales mix. (Round per unit contribution margins to 2 decimal places.)

Company E has two divisions, Division A and Division B. Division A is currently buying Component X from an external seller for $12. Division B produces Component X and has excess capacity. Using the following data, what would the transfer price per unit if Division A purchased Component X from Division B at the market-based transfer price? • Variable cost per unit $10 • Fixed cost per unit 1.16 • Division B sales price of Component X 14.50

Bonita Company manufactures a product with a unit variable cost of $43 and a unit sales price of $75. Fixed manufacturing costs were $79500 when 7950 units were produced and sold, equating to $10 per unit. The company has a one-time opportunity to sell an additional 1000 units at $54 each in an international market, which would notaffect its present sales. The company has sufficient capacity to produce the additional units. How much is the relevant income effect of accepting the special order? $43000 $1000 $11000 $7950

The Eastern division sells goods internally to the Western division of the same company. The quoted external price in industry publications from a supplier near Eastern is $200 per ton plus transportation. It costs $20 per ton to transport the goods to Western. Eastern's actual market cost per ton to buy the direct materials to make the transferred product is $100. Actual per ton direct labor is $50. Other actual costs of storage and handling are $40. Assuming there is an excess capcity in the Eastern Division, the minimum and maximum transfer price are: