The Robo Division, a decentralized division of GMT Industries, has been approached to submit a bid for a potential project for the RSP Company. Robo Division has been informed by RSP that they will not consider bids over $8,000,000. Robo Division purchases its materials from the Cross Division of GMT Industries. There would be no additional fixed costs for either the Robo or Cross Divisions. Information regarding this project is as follows. Cross Robo Division Division Variable Costs $1,500,000 $4,800,000 Transfer Price 3,700,000 If Robo Division submits a bid for $8,000,000, the amount of contribution margin recognized by the Robo Division and GMT Industries, respectively, is: a. $(500,000) and $(2,000,000). Ob. $3,200,000 and $(500,000). Oc. $(500,000) and $1,700,000. Od. $3,200,000 and $1,700.000.

hello, please give more emphasis on points a,b,c, and d Spark Ltd has two divisions, assembly and electrical. The assembly division transfers partiallycompleted components to the electrical division at a predetermined transfer price. The assemblydivision’s standard variable production cost per unit is $550. This division has spare capacity, and itcould sell all its components to outside buyers at $680 per unit in a perfectly competitive market.Required:a) Determine a transfer price using the general rule.b) How would the transfer price change if the assembly division had no spare capacity? c) What transfer price would you recommend if there was no outside market for the transferredcomponent and the assembly division had spare capacity? d) Explain how negotiation between the supplying and buying units may be used to set transferprices. How does this relate to the general transfer pricing rule?

Se.119.

AMD is contemplating a decision to either continue producing a unique line of microprocessors, or discontinue production. • The AMD factory manufactures approximately 100,000 of such processors and generates $3,000,000 in revenues and incurs $2,000,000 in variable costs. • AMD estimates that if the product is discontinued ADM would save $ 1,500,000 in fixed manufacturing costs in engineering support and depreciation costs of production equipment. • Should AMD keep or discontinue production of this product line?

Glide Behind Corporation manufactures and sells small cargo trailers. The Wheel Division creates parts that are both sold externally and transferred internally to the Assembly Division. Variable production costs of wheel set #102 are $80, and each set sells externally for $150. What would you recommend as the internal transfer price from the Wheel Division to the Assembly Division if a competitive external market exists for wheel set #102? Would your answer change if there were no external market this component? Why? What would the transfer price be if upper management required cost plus 25 percent as the transfer price?

Kim Inc. must install a new air conditioning unit in its main plant. Kim must install one or the other of the units; otherwise the highly profitable plant would have to shut down. Two units are available, HCC and LCC (for high and low capital costs). HCC has a high capital cost but relatively low operating costs, while LCC has a low capital cost but higher operating costs because it uses more electricity. The costs of the units are shown below. Kim’s WACC is 7%.     Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 HCC -$600,000 -$50,000 -$50,000 -$50,000 -$50,000 -$50,000 LCC -$100,000 -$175,000 -$175,000 -$175,000 -$175,000 -$175,000   a) Which unit would you recommend? Explain. b) If Kim’s controller wanted to know the IRRs of the two projects, what would you tell him? c) If the WACC rose to 15% would this affect your recommendation? Explain your answer and the reason this result occurred.

"The Midwest Division of the Paibec Corporation manufactures subassemblies that are used in the corpora-tion’s  final  products.  Lynn  Hardt  of  Midwest’s  Profit  Planning  Department  has  been  assigned  the  task  of  determining whether a component, MTR–2000, should continue to be manufactured by Midwest or purchased from Marley Company, an outside supplier. MTR–2000 is part of a subassembly manufactured by Midwest.Marley has submitted a bid to manufacture and supply the 32,000 units of MTR–2000 that Paibec will need for 20x1 at a unit price of $17.30. Marley has assured Paibec that the units will be delivered according  to  Paibec’s  production  specifications  and  needs.  While  the  contract  price  of  $17.30  is  only  applicable in 20x1, Marley is interested in entering into a long-term arrangement beyond 20x1.Hardt has gathered the following information regarding Midwest’s cost to manufacture MTR–2000 in 20x0. These annual costs will be incurred to manufacture 30,000…

12-3. Analyzing a company's future plant expansion based on its costing methods. The board of directors of the Williams Corporation is considering the possibility of a plant expansion. After some research and a review of the company's materials costing methods, the president presents the controller with the proposition of using the lifo method instead of the present fifo method because of its apparent tax advantages. A reduction of the company's income tax liability might provide additional capital for the planned expansion. The presidert requests the controller to study the proposal further. The controller's analysis regarding the inventory is based on these transactions for June: June 1. Beginning balance: 200 units @ $3.00 per unit. 2. Purchased 500 units @ $3.20 per unit. 7. Issued 400 units. 11. Purchased 300 units @ $3.30 per unit. 14. Issued 400 units. 17. Purchased 400 units @ $3.20 per unit. 21. Issued 200 units. 24. Purchased 300 units @ $3.40 per unit. 26. Purchased 400…

Kim Inc. must install a new air-conditioning unit in its main plant. Kim must install one or the other of the units; otherwise, the highly profitable plant would have to shut down. Two units are available, HCC and LCC (for high and low capital costs, respectively). HCC has a high capital cost but relatively low operating costs, while LCC has a low capital cost but higher operating costs because it uses more electricity. The costs of the units are shown here. Kim's WACC is 5%. HCC LCC 0 1 2 3 5 -$590,000 -$110,000 -$45,000 -$170,000 -$45,000 -$45,000 -$170,000 -$170,000 -$45,000 -$170,000 -$45,000 -$170,000 a. Which unit would you recommend? 1. Since all of the cash flows are negative, the NPV's cannot be calculated and an alternative method must be employed. II. Since all of the cash flows are negative, the NPV's will be negative and we do not accept any project that has a negative NPV. III. Since we are examining costs, the unit chosen would be the one that had the lower NPV of costs.…

Required: 1. Assume the Quark Division has enough idle capacity to fill the 5,300-unit order. Is the division likely to accept the $405 price or to reject it? 2. Assume both the Screen Division and the Quark Division have idle capacity. Under these conditions, what is the financial advantage (disadvantage) for the company as a whole (on a per unit basis) if the Quark Division rejects the $405 price? 3. Assume the Quark Division has idle capacity but that the Screen Division is operating at capacity and could sell all of its screens to outside manufacturers. Under these conditions, what is the financial advantage (disadvantage) for the company as a whole (on a per unit basis) if the Quark Division accepts the $405 unit price?