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.)

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.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Oat Treats manufactures various types of cereal bars featuring oats. Simmons Cereal Company has approached Oat Treats with a proposal to sell the company its top selling oat cereal bar at a price of $27,500 for 20,000 bars. The costs shown are associated with production of 20,000 oat bars currently: The manufacturing overhead consists of $3,000 of variable costs with the balance being allocated to fixed costs. PLEASE NOTE: Costs per unit are rounded to two decimal places and shown with "$" and commas as needed (i.e. $1,234.56). All other dollar amounts are rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345). What is Oat Treats' relevant cost? What does Simmons Cereal's offer cost? If Oat Treats accepts the offer, what will the effect on profit be? Incremental dollar amount = _________ Increase or Decrease? . ___________ Please note: Your answer is either "Increase" or "Decrease" - capital first letters and no quotes.
Lock Division of Morgantown Corporation sells 90,000 units of part Z-25 to the outside market. Part Z-25 sells for $50, has a variable cost of $32, and a fixed cost per unit of $20. The Lock Division has a capacity to produce 125,000 units per period. The Cabinet Division currently purchases 20,000 units of part Z-25 from the Lock Division for $50. The Cabinet Division has been approached by an outside supplier willing to supply the parts for $46. What is the effect on Morgantown's overall profit if the Lock Division refuses to sell at the outside supplier’s price and the Cabinet Division decides to buy outside? Multiple Choice No change in Morgantown's profits. $45,000 increase in Morgantown's profits. $90,000 decrease in Morgantown's profits. $280,000 decrease in Morgantown's profits.
Owly Corporation’s agriculture division currently produces their own soil mix to grow the plants they sell in. Owly currently makes 200,000 cubic meters of soil mix a year. Each cubic meter of soil mix has direct labour costs of $1.50, direct material costs of $3.15, variable overhead costs of $0.75, and fixed overhead costs of $0.70 for a total cost of $6.10 per cubic meter. An outside supplier has offered to sell Owly soil mix for $5.75 per cubic meter. If Owly purchases the soil mix, 25% of the fixed manufacturing overhead will be eliminated, the remaining 75% will still exist.A. What is the net dollar advantage (disadvantage) of purchasing the soil mix rather than making it?B. What is the maximum amount Owly is willing to pay an outside supplier per cubic meter (to the cent) for the soil mix if the supplier commits to supplying all 200,000 cubic meters?C. After one month of greenhouse growing time Owly can produce 100,000 four inch pot basil plants that can be sold for $2.20 each.…
Fyodor Corporation has a Parts Division that does work for other Divisions in the company as well as for outside customers. The company's Machine Division has asked the Parts Division to provide it with 6,000 special parts each year. The special parts would require $21 per unit in variable production costs. The Machine Division has a bid from an outside supplier for the special parts at $31.20 per unit. In order to have time and space to produce the special part, the Parts Division would have to cut back production of another part-the QR4 that it presently is producing. The QR4 sells for $40 per unit and requires $20 per unit in variable production costs. Packaging and shipping costs of the QR4 are $2 per unit. Packaging and shipping costs for the new special part would be only $0.50 per unit. The Parts Division is now producing and selling 30,000 units of the QR4 each year. Production and sales of the QR4 would drop by 5% if the new special part is produced for the Machine Division.…
Peppertree Company has two divisions, East and West. Division East manufactures a component that Division West uses. The variable cost to produce this component is $1.56 per unit; full cost is $1.98. The component sells on the open market for $4.96. Assuming Division East has excess capacity, what is the lowest price Division East will accept for the component? What is the highest price that Division West will pay for it? (Enter your answers in 2 decimal places.)
The Trailer division of Baxter Bicycles makes bike trailers that attach to bicycles and can carry children or cargo. The trailers have a market price of $103 each. Each trailer incurs $38 of variable manufacturing costs. The Trailer division has capacity for 29,000 trailers per year and has fixed costs of $480,000 per year. 1. Assume the Assembly division of Baxter Bicycles wants to buy 5,200 trailers per year from the Trailer division. If the Trailer division can sell all of the trailers it manufactures to outside customers (and has no excess capacity), what price should be used on transfers between divisions? 2. Assume the Trailer division currently only sells 10,200 trailers to outside customers and has excess capacity. The Assembly division wants to buy 5,200 trailers per year from the Trailer division. What is the range of acceptable prices on transfers between divisions? 1. Transfer price per trailer 2. Transfer price per trailer will be at least but not more than
Sunland Company manufactures and sells high-priced motorcycles. The Engine Division produces and sells to other motorcycle companies and internally to its Production Division. It has been decided that the Engine Division will sell 28000 units to the Production Division ar $1050 a unit. The Engine Division, currently operating at fall capacity, has a selling price of $3250 amd unit variable costs and unit fixed costs of $1050 and $650, respectively. The Production Division is currently paying $3000 per unit to an outside supplier. Of this amount, $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? - $3140 - $ 2200 $3000 - $3250
The materials used by the North Division of Horton Company are currently purchased from outside suppliers at $29 per unit. These same materials are produced by Horton’s South Division. The South Division can produce the materials needed by the North Division at a variable cost of $14 per unit. The division is currently producing 126,000 units and has capacity of 180,000 units. The two divisions have recently negotiated a transfer price of $20 per unit for 54,000 units. By how much will each division's income increase as a result of this transfer? South Division $ North Division $
The process-control division expects to sell 1,250 process-control units this year. From the viewpoint of Sierra Inc. as a whole, should 1,250 Xcel-chips be transferred to the process-control division to replace circuit boards? Show your computations.
Adams Bicycle Manufacturing Company currently produces the handlebars used in manufacturing its bicycles, which are high-quality racing bikes with limited sales. Adams produces and sells only 6,200 bikes each year. Due to the low volume of activity, Adams is unable to obtain the economies of scale that larger producers achieve. For example, Adams could buy the handlebars for $30 each; they cost $33 each to make. The following is a detailed breakdown of current production costs. Item Unit-level costs Materials Labor Overhead Allocated facility-level costs Total Unit Cost $15 9 2 7 $33 Total $ 93,000 55,800 12,400 43,400 $204,600 After seeing these figures, Adams's president remarked that it would be foolish for the company to continue to produce the handlebars at $33 each when it can buy them for $30 each. Required Calculate the total relevant cost. Do you agree with the president's conclusion? Answer is complete but not entirely correct. Per Unit Total
Colt Company owns a machine that can produce two specialized products. Production time for Product TLX is three units per hour and for Product MTV is five units per hour. The machine’s capacity is 2,600 hours per year. Both products are sold to a single customer who has agreed to buy all of the company’s output up to a maximum of 4,420 units of Product TLX and 5,995 units of Product MTV. Selling prices and variable costs per unit to produce the products follow. $ per unit Product TLX Product MTV Selling price per unit $ 11.50 $ 6.90 Variable costs per unit 3.45 4.14 Determine the company's most profitable sales mix and the contribution margin that results from that sales mix. (Round per unit contribution margins to 2 decimal places.)
Steven oversees the production department for a factory that makes plastic outdoor chairs. department sells all of its production to external parties, and the department has an overall production capacity of 150,000 chairs. Their sales data is as follows: Sales (90,000 chairs) a $460,000, Variable Costs are $206,200, and Fixed Costs are $194,350. The internal Resale would like to purchase 26,700 chairs from the Production Department. They will be selling external retailers for $15.49 per chair. If the Resale Division negotiates a deal with the Pro Department to purchase each chair for its absorption cost plus a 2.4% markup, then what amount of Operating Income the Resale Division would report for their sale of 26,700 cha per unit cost to nearest cents. O $291,831 O $351,105 O $198,235 O $3,612