None Swifty Corporation manufactures and sells high-priced motorcycles. The Engine Division produces and sellsengines to other motorcycle companies and internally to its Production Division. It has been decided that theEngine Division will sell 30000 units to the Production Division at $1050 a unit. The Engine Division, currentlyoperating at fall capacity, has a unit selling price of $3550 and unit variable costs and unit fixed costs of $1050 and$700, respectively. The Production Division is currently paying $3300 per unit to an outside supplier. Of thisamount, $120 per unit can be saved on internal sales from reduced selling expenses.What is the minimum transfer price that the Engine Division should accept?○ $2500$3430○ $3550O $3300

To determine the minimum transfer price that the Engine Division should accept, we need to consider…

Answered: Swifty Corporation manufactures and…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing

Section: Chapter Questions

Problem 4CE

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Tuttle Motorcycles Inc. manufactures and sells high-priced motorcycles. The Engine Division produces and sells engines to other motorcycle companies and internally to the Production Division. It has been decided that the Engine Division will sell 30,000 units to the Production Division. The Engine Division, currently operating at capacity, has a unit sales price of P1,800 and unit variable costs and fixed costs of P700 and P500, respectively. The Production Division is currently paying P1,600 per unit to an outside supplier. P180 per unit can be saved on internal sales from reduced selling expenses.14. What is the minimum transfer price that the Engine Division should accept? ______________15. What is the increase/decrease in overall company profits if this transfer takes place? ______________16. If Engine Division has enough excess capacity to provide the requirement of Production Division, what is the minimum transfer price that the Engine Division should accept? ______________17.…
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Swifty Corporation manufactures and sells high-priced motorcycles. The Engine Division produces and sells engines to other motorcycle companies and internally to the Production Division. It has been decided that the Engine Division will sell 23000 units to the Production Division at 1050 a unit. The Engine Division, currently operating at capacity, has a unit sales price of $2650 and unit variable costs and fixed costs of $1050 and $1600, respectively. The Production Division is currently paying $2500 per unit to an outside supplier. $110 per unit can be saved on internal sales from reduced selling expenses. What is the minimum transfer price that the Engine Division should accept? $1600 $2500 $2540 $2650
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Tuttle Motorcycles Inc. manufactures and sells high-priced motorcycles. The Engine Division produces and sells engines to other motorcycle companies and internally to the Production Division. It has been decided that the Engine Division will sell 20,000 units to the Production Division at $1,050 a unit. The Engine Division, currently operating at capacity, has a unit sales price of $2,550 and unit variable costs and fixed costs of $1,050 and $750, respectively. The Production Division is currently paying $2,400 per unit to an outside supplier. What is the minimum transfer price that the Engine Division should accept? (Round your answer to a whole number if needed. Just put the number in the blank. No $ sign.) 2,460
Avery Company has two divisions, Polk and Bishop. Polk produces an item that Bishop could use in its production. Bishop currently is purchasing 26,000 units from an outside supplier for $16 per unit. Polk is currently operating at less than its fll capacity of 580,000 units and has variable costs of $8 per unit. The full cost to manufacture the unit is $11. Polk currently sells 460,000 units at a selling price of $19 per unit. a. What will be the effect on Avery Company's operating profit if the transfer is made internally? b. What is the minimum transfer price from Polk's perspective? Minimum Transfer Price
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Germano Products, Incorporated, has a Pump Division that manufactures and sells a number of products, including a standard pump that could be used by another division in the company, the Pool Products Division, in one of its products. Data concerning that pump appear below: Capacity in units 72,500 Selling price to outside customers $ 79 Variable cost per unit $ 28 Fixed cost per unit (based on capacity) $ 32 The Pool Products Division is currently purchasing 17,000 of these pumps per year from an overseas supplier at a cost of $74 per pump. Assume that the Pump Division is selling all of the pumps it can produce to outside customers. Does there exist a transfer price that would make both the Pump and Pool Products Division financially better off than if the Pool Products Division were to continue buying its pumps from the outside supplier?
Washington Company has two divisions, Jefferson and Adams. Jefferson produces an item that Adams could use in its production. Adams currently is purchasing 100,000 units from an outside supplier for $78.40 per unit. Jefferson is currently operating at full capacity of 900,000 units and has variable costs of $46.40 per unit. The full cost to manufacture the unit is $59.20. Jefferson currently sells 900,000 units at a selling price of $86.40 per unit. Required: 1. What will be the effect on Washington Company's operating profit if the transfer is made internally? 2. What will be the change in profits for Jefferson if the transfer price is $67.20 per unit? 3. What will be the change in profits for Adams if the transfer price is $67.20 per unit?
Bostonian Inc. has a number of divisions, including the Delta Division and the Listen Now Division. The Listen Now Division owns and operates a line of MP3 players. Each year, the Listen Now Division purchases component AZ in order to manufacture the MP3 players. Currently, it purchases this component from an outside supplier for $6.50 per component. The manager of the Delta Division has approached the manager of the Listen Now Division about selling component AZ to the Listen Now Division. The full product cost of component AZ is $3.10. The Delta Division can sell all of the component AZs it makes to outside companies for $6.50. The Listen Now Division needs 18,000 component AZs per year; the Delta Division can make up to 60,000 components per year. Required: A. Which division sets the maximum transfer price? Which division sets the minimum transfer price? Maximum Minimum B. Suppose the company policy is that all transfer take place at full cost. What is the transfer…
Zumsteg Products, Incorporated, has a Pump Division that manufactures and sells a number of products, including a standard pump. Date concerning that pump appear below: Capacity in units Selling price to outside customers Variable cost per unit Fixed cost per unit (based on capacity) 72,800 #106 70.0 $20 The company has a Pool Products Division that could use this pump in one of its products. The Pool Products Division is currently purchasing 8,800 of these pumps per year from an overseas supplier at a cost of $99 per pump. Required: Assume that the Pump Division has enough Idle capacity to handle all of the Pool Products Division's needs. What is the acceptable ange, If any, for the transfer price between the two divisions? Note: Round your answers to 1 decimal place.
c. What is the maximum transfer price? (Round your answer to 2 decimal places.) Maximum Transfer Price

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