The Heating Division of Sheffield International produces a heating element that it sells to its customers for $46 per unit. Its unit variable cost is $29, and its unit fixed cost is $5. Top management of Sheffield International would like the Heating Division to transfe 14,800 heating units to another division within the company at a price of $32. The Heating Division is operating at full capacity. Assume that the units being requested are special high-performance units, and the division's unit variable cost would be $30 (rather than $29). What is the minimum transfer price that the Heating Division should accept? Minimum transfer price
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- Please show work: The Heating Division of Pronghorn International produces a heating element that it sells to its customers for $46 per unit. Its unit variable cost is $26, and its unit fixed cost is $6. Top management of Pronghorn International would like the Heating Division to transfer 14,600 heating units to another division within the company at a price of $27. Assume that the Heating Division has sufficient excess capacity to provide the 14,600 heating units to the other division. What is the minimum transfer price that the Heating Division should accept? Minimum transfer price $The Heating Division of Oriole International produces a heating element that it sells to its customers for $47 per unit. Its variable cost per unit is $23, and its fixed cost per unit is $8. Top management of Oriole International would like the Heating Division to transfer 15.000 heating units to another division within the company at a price of $35. Assume that the Heating Division has sufficient excess capacity to provide the 15,000 heating units to the other division. What is the minimum transfer price that the Heating Division should accept? Minimum transfer price $Quest Motors, Inc., operates as a decentralized multidivision company. The Vivo division of Quest Motors purchases most of its airbags from the airbag division. The airbag division’s incremental cost for manufacturing the airbags is $90 per unit. The airbag division is currently working at 80% of capacity. The current market price of the airbags is $125 per unit. Q. Suppose that Quest Motors requires that whenever divisions with unused capacity sell products internally, they must do so at the incremental cost. Evaluate this transfer-pricing policy using the criteria of goal congruence, evaluating division performance, motivating management effort, and preserving division autonomy
- The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to external customers for $25 per unit. Variable costs for the casing are $12 per unit and fixed cost is $3 per unit. Cotwold executives would like for the Molding Division to transfer 8,000 units to the Assembly Division at a price of $18 per unit. Assume the Molding Division is operating at full capacity. Required: 1. Should it accept the transfer price proposed by management? 2. Identify the minimum transfer price that the Molding Division will accept. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Should it accept the transfer price proposed by management? Should it accept the transfer price proposed by management? Required 1 Required 2 >* Your answer is incorrect. The Heating Division of Riverbed International produces a heating element that it sells to its customers for $43 per unit. Its unit variable cost is $25, and its unit fixed cost is $12. Top management of Riverbed International would like the Heating Division to transfer 15,500 heating units to another division within the company at a price of $32. The Heating Division is operating at full capacity. Assume that the units being requested are special high-performance units, and the division's unit variable cost would be $30 (rather than $25). What is the minimum transfer price that the Heating Division should accept? Minimum transfer price $ 43The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to external customers for $32 per unit. Variable costs for the casing are $19 per unit, and fixed cost is $4 per unit. Cotwold executives would like for the Molding Division to transfer 15,000 units to the Assembly Division at a price of $24 per unit. Assume that the Molding Division has enough excess capacity to accommodate the request. Required: Should the Molding Division accept the $24 transfer price proposed by management? Calculate the effect on the Molding Division’s net income if it accepts the $24 transfer price
- 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?The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to external customers for $36 per unit Variable costs for the casing are $12 per unit, and fixed cost is $5 per unit Cotwold executives would like for the Molding Division to transfer 19,000 units to the Assembly Division at a price of $30 per unit. Assume that the Molding Division has excess capacity, but the Assembly Division requires the casing to be made from a specific blend of plastics. This would raise the variable cost per unit to $33 Required: 1. Should the Molding Division accept the $30 transfer price proposed by management? 2. Determine the minimum transfer price that it will accept. 3. Determine the mutually beneficial transfer price so that the two divisions equally split the profits from the transferWetherald 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 55,000 Selling price to outside customers $ 82 Variable cost per unit $53 Fixed cost per unit (based on capacity) $11 The Pool Products Division is currently purchasing 4,000 of these pumps per year from an overseas supplier at a cost of $74 per pump. Assume that the Pump Division has enough idle capacity to handle all of the Pool Products Division's needs. What should be the minimum acceptable transfer price for the pumps from the standpoint of the Pump Division? Multiple Choice $74 per unit $53 per unit $64 per unit $82 per unit
- 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 23Germano 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 70,000 Selling price to outside customers $ 77 Variable cost per unit $ 27 Fixed cost per unit (based on capacity) $ 31 The Pool Products Division is currently purchasing 16,000 of these pumps per year from an overseas supplier at a cost of $72 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? Multiple Choice Yes, both divisions are always better off regardless of whether the selling division has enough idle…Easy Fit Ltd. manufactures heating, ventilation, and air conditioning (HVAC) equipment. The Manufacturing Division creates parts; and, the Assembly Division builds and sells the equipment. The Manufacturing Division "sells" furnace parts packages to the Assembly Division. The market price for the Assembly Division to purchase a mini furnace is $3,500. The fixed costs for the Manufacturing Division are assumed to be the same over the range of 2,000-5,000 units. The fixed costs for the Assembly Division are assumed to be $40.00 per unit at 5,000 units. Manufacturing costs per furnace are: $1,300.00 $350.00 $100.00 Direct materials Direct labour Variable overhead Division fixed costs $90.00 Assembly's costs per completed furnace are: $25.00 $150.00 $50.00 $40.00 Direct materials Direct labour Variable overhead Division fixed costs If the Assembly Division sells 1,000 furnaces at a price of $3,500 per unit to customers, what is the company's operating income? $1,660,000 $3,250,000 $175,000…