The Heating Division of Kobe International produces a heating element that it sells to its customers for $45 per unit. Its unit variable cost is $25, and its unit fixed cost is $10. Top management of Kobe International would like the Heating Division to transfer 15,000 heating units to another division within the company at a price of $29. The Heating Division is operating at full capacity. What is the minimum transfer price that the Heating Division should accept? Minimum transfer price $

The Heating Division of Kobe International produces a heating element that it sells to its customers for $45 per unit. Its unit variable cost is $25, and its unit fixed cost is $10. Top management of Kobe International would like the Heating Division to transfer 15,000 heating units to another division within the company at a price of $29. The Heating Division is operating at full capacity. What is the minimum transfer price that the Heating Division should accept? Minimum transfer price $

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 5P: Hudson Corporation is considering three options for managing its data warehouse: continuing with its...

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Emerald Island Company is considering building a manufacturing plant in County Kerry. Predicting sales of 100,000 units, Emerald Isle estimates the following expenses: An Irish firm that specializes in marketing will be engaged to sell the manufactured product and will receive a commission of 10% of the sales price. None of the U.S. home office expense will be allocated to the Irish facility. Required: 1. If the unit sales price is 2, how many units must be sold to break even? (Hint: First compute the variable cost per unit.) 2. Calculate the margin of safety ratio. 3. Calculate the contribution margin ratio.
Hudson Corporation is considering three options for managing its data warehouse: continuing with its own staff, hiring an outside vendor to do the managing, or using a combination of its own staff and an outside vendor. The cost of the operation depends on future demand. The annual cost of each option (in thousands of dollars) depends on demand as follows: If the demand probabilities are 0.2, 0.5, and 0.3, which decision alternative will minimize the expected cost of the data warehouse? What is the expected annual cost associated with that recommendation? Construct a risk profile for the optimal decision in part (a). What is the probability of the cost exceeding $700,000?
The Heating Division of Swifty International produces a heating element that it sells to its customers for $38 per unit. Its unit variable cost is $23, and its unit fixed cost is $8. Top management of Swifty International would like the Heating Division to transfer 15,400 heating units to another division within the company at a price of $31. The Heating Division is operating at full capacity. What is the minimum transfer price that the Heating Division should accept? Minimum transfer price 23
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
The Windshield division of Fast Car Co. makes windshields for use in Fast Car’s Assembly division. The Windshield division incurs variable costs of $200 per windshield and has capacity to make 500,000 windshields per year. The market price is $450 per windshield. The Windshield division incurs total fixed costs of $3,000,000 per year. If the Windshield division has excess capacity, what is the range of possible transfer prices that could be used on transfers between the Windshield and Assembly divisions?
The clock division of Control Central Corporation manufactures clocks and then sells them to customers for $10 per unit. Its variable cost is $4 per unit, and its fixed cost per unit is $2.50. Management would like the clock division to transfer 8.000 of these clocks to another division within the company at a price of $5. The clock division could avoid $0.50 per clock variable packaging costs by selling internally. Required:a. Determine the minimum transfer price, assuming the clock division is not operating at full capacity and what is your interpretation of these results?b. Determine the minimum transfer price, assuming the clock division is operating at full capacity and what is your interpretation of these results?c. Why transfer pricing policy can be interpreted negatively and positively? Give an explanation!
Management of the Crane Company would like the Food Division to transfer 11000 cans of its final product to the Restaurant Division for $40. The Food Division sells the product to customers for $80 per unit. The Food Division’s variable cost per unit is $43 and its fixed cost per unit is $9.If the Food Division has 11000 units available capacity, what is the minimum transfer price the Food Division should accept?
The Can Division of Crane Company manufactures and sells tin cans externally for $0.70 per can. Its unit variable costs and unit fixed costs are $0.24 and $0.07, respectively. The Packaging Division wants to purchase 50,000 cans at $0.31 a can. Selling internally will save $0.05 a can.Assuming the Can Division is already operating at full capacity, what is the minimum transfer price it should accept? $0.67 $0.39 $0.36 $0.65
The Windshield division of Jaguar Company makes windshields for use in its Assembly division. The Windshield division incurs variable costs of $208 per windshield and has capacity to make 670,000 windshields per year. The market price is $530 per windshield. The Windshield division incurs total fixed costs of $4,000,000 per year. If the Windshield division has excess capacity, what is the range of possible transfer prices that could be used on transfers between the Windshield and Assembly divisions? Transfer price per windshield will be at least but not more than
The Windshield division of Fast Car Co. makes windshields for use in Fast Car’s Assembly division. The Windshield division incurs variable costs of $200 per windshield and has capacity to make 500,000 windshields per year. The market price is $450 per windshield. The Windshield division incurs total fixed costs of $3,000,000 per year. If the Windshield division is operating at full capacity, what transfer price should be used on transfers between the Windshield and Assembly divisions?
The Can Division of Marigold Corp. manufactures and sells tin cans externally for $0.60 per can. Its unit variable costs and unit fixed costs are $0.24 and $0.06, respectively. The Packaging Division wants to purchase 50,000 cans at $0.30 a can. Selling internally will save $0.03 a can.Assuming the Can Division has sufficient capacity, what is the minimum transfer price it should accept? $0.30 $0.21 $0.27 $0.24
The Windshield division of Fast Car Co. makes windshields for use in Fast Car’s Assembly division. The Windshield division incurs variable costs of $240 per windshield and has capacity to make 630,000 windshields per year. The market price is $475 per windshield. The Windshield division incurs total fixed costs of $3,050,000 per year. If the Windshield division is operating at full capacity, what transfer price should be used on transfers between the Windshield and Assembly divisions? he Windshield division of Fast Car Co. makes windshields for use in Fast Car’s Assembly division. The Windshield division incurs variable costs of $240 per windshield and has capacity to make 630,000 windshields per year. The market price is $475 per windshield. The Windshield division incurs total fixed costs of $3,050,000 per year.If the Windshield division is operating at full capacity, what transfer price should be used on transfers between the Windshield and Assembly divisions?…