Division B wants to purchase a partfrom Division A. Division A's variablecost per unit is $18. Allocated fixedcosts are $5 per unit. Division B canpurchase the part from an outsidesupplier for $26 per unit. What is thehighest transfer price per unit thatDivision B will be willing to pay?

Division AOutside SupplierCost Price 26.00 Variable Cost18.00 Fixed Cost 5.00 Total Cost23.00…

Answered: Division B wants to purchase a part…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 18E

See similar textbooks

Similar questions

1. Determine the minimum transfer price that Cutting Division would accept. 2. Determine the maximum transfer price that the Assembly Division would pay. 3. If Cutting Division will accept the offer of Assembly Division, how much is the change in its operating income ? 4. If Cutting Division will make a counter offer of P45.25 per part, how much is the change in the operating income of Assembly Division assuming that its external supplier could not supply its needed quantity?
_____ 1. If Moonton Company instructed Northern Vale Division to supply Iron Hooks to Mooniyan Division, how much is the maximum transfer price that they can consider? (Round off your final answer to 3 decimal places)_____ 2. Continuing from Question No.1, how much is the minimum transfer price that they can consider? (Round off your final answer to 3 decimal places)
Compute the new full-cost transfer price if it is applied to just the additional 400 tons.
Division P can make a unit for a standard variable cost of £10 and a standard fixed cost per unit (based on budgeted production) of £3. This would then be transferred to Division Q, which would have a further standard variable cost of £8 and fixed costs per unit of £4 before selling at £21 per unit. There are no external markets for the item to be transferred between divisions. If the transfer price is set at £12, what will be the reaction of the divisions? Division P Division Q A) Will be willing to produce units Will be willing to produce units B) Will be willing to produce units Will be unwilling to produce units C) Will be unwilling to produce units Will be willing to produce units D) Will be willing to produce units Will be unwilling to produce units
Using the formula in the text, if the lowest acceptable transfer price from the viewpoint of the selling division is $95 and the opportunity cost per unit on outside sales is $38, then the variable cost per unit must be:
Division J makes a product, R, which it sells externally into a perfectly competitive market for £57; this represents a 90% mark-up on standard variable cost. It also transfers product R to Division K. If total external demand for product R exceeds the capacity of Division J, what is the optimal transfer price between divisions for a unit of product R? A) £54.50 B) £55.50 C) £56.72 D) £57.00
Questions: What is the minimum transfer price that the repair division should obtain for its services, assuming it is operating at capacity? P 28.50 per hour P 30.00 per hour P 48.00 per hour What is the maximum price the management division should pay? P 28.50 P 30.00 P 48.00 If the repair division has idle capacity, what is the minimum transfer price that the repair division should obtain? P 28.50 P 30.00 P 48.00
Division J makes a product, R, which it sells externally into a perfectly competitive market for £57; this represents a 90% mark-up on standard variable cost. It also transfers product R to Division K. The costs for the external sales include variable selling costs of £1.50 which are not incurred on transfers to Division K. If total external demand for product R exceeds the capacity of Division J, what is the optimal transfer price between divisions for a unit of product R? A) £54.50 B) £55.50 C) £56.72 D) £57.00
A division can sell externally for $75 per unit. Its variable manufacturing costs are $42 per unit, and its variable marketing costs are $23 per unit. What is the optimal transfer price for transferring internally, assuming the division is operating at capacity?
When the selling division in an Internal transfer can sell every product at Its market price, then the lowest acceptable transter price as far as the seling diion is concened is Multiple Cholce The amount that the purchasing division would have to pay an outslde seller to acquire a similar product for Its use. The fixed cost of producing a unit of product. The market price charged to outside customers. The variable cost of producing a unit of product. Total cost of producing a unit of product.
The Can Division of Sheffield Corp. manufactures and sells recyclable containers externally for $0.97 per container. Its unit variable costs and unit fixed costs are $0.24 and $0.11, respectively. The Packaging Division wants to purchase 50,000 containers at $0.36 per unit. Selling internally will save $0.02 a container.Assuming that the Can Division has sufficient capacity, what is the minimum transfer price it should accept? a.$0.24 b.$0.36 c.$0.34 d.$0.22
Suppose division A quoted a transfer price of $110 for up to 800 units. What would be the contribution to the company as a whole if a transfer were made? As manager of division B, would you be inclined to buy at $110? Explain.

SEE MORE QUESTIONS

Recommended textbooks for you

Managerial Accounting

Accounting

ISBN:

9781337912020

Author:

Carl Warren, Ph.d. Cma William B. Tayler

Publisher:

South-Western College Pub

Managerial Accounting

Accounting

ISBN:

9781337912020

Author:

Carl Warren, Ph.d. Cma William B. Tayler

Publisher:

South-Western College Pub

SEE MORE TEXTBOOKS

Division B wants to purchase a part from Division A. Division A's variable cost per unit is $18. Allocated fixed costs are $5 per unit. Division B can purchase the part from an outside supplier for $26 per unit. What is the highest transfer price per unit that Division B will be willing to pay?