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 transferred component and the assembly division had spare capacity?

General guideline, transfer pricing. The Slate Company manufactures and sells television sets. Its assembly division (AD) buys television screens from the screen division (SD) and assembles the TV sets. The SD, which is operating at capacity,incurs an incremental manufacturing cost of $65 per screen. The SD can sell all its output to the outside market at a priceof $100 per screen, after incurring a variable marketing and distribution cost of $8 per screen. If the AD purchases screens from outside suppliers at a price of $100 per screen, it will incur a variable purchasing cost of $7 per screen. Slate’s division managers can act autonomously to maximize their own division’s operating income.1. What is the minimum transfer price at which the SD manager would be willing to sell screens to the AD?2. What is the maximum transfer price at which the AD manager would be willing to purchase screens from the SD?3. Now suppose that the SD can sell only 70% of its output capacity of 20,000…

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.

Assume you are the department B manager for Marleys manufacturing. Marley’s operates under a cost-based transfer structure. Assume you receive the majority of your raw materials from department A, which sells only to department B (they have no outside sales)   Assume the market price for the items your department purchase is 15% below what you are being charged by department A of Marley’s manufacturing.   Determine the operating income for department B, assuming department A “sold” department B 1,000 unit during the month and department A reduced the selling price to the market price. Round your percentage answer to one decimal.

Carol Components operates a Production Division and a Packaging Division. Both divisions are evaluated as profit centers. Packaging buys components from Production and assembles them for sale. Production sells many components to third parties in addition to Packaging. Selected data from the two operations follow: Capacity (units) Sales price Variable costsb Fixed costs a For Production, this is the price to third parties. b For Packaging, this does not include the transfer price paid to Production. Suppose Production is located in Country A with a tax rate of 30 percent and Distribution in Country B with a tax rate of 10 percent. All other facts remain the same. a. Optimal transfer price b. Transfer price c Transfer price Required: a. Current output in Production is 25,300 units. Packaging requests an additional 5,960 units to produce a special order. What transfer price would you recommend? to search b. Suppose Production is operating at full capacity. What transfer price would you…

A newly formed company must decide on a plant location. There are two alternatives under consideration: locate near the major raw materials or locate near the major customers. Locating near the raw materials will result in lower fixed and variable costs than locating near the market, but the owners believe that there would be a loss in sales volume because customers tend to favour local suppliers. Revenue per unit will be $160 in either case. Annual fixed costs ($ millions) Variable cost per unit Expected annual demand (units) Near raw materials Near customers 1. Using the above given information, determine the profits for each alternative. (Negative answers should be indicated by a minus sign.) 64 2. Which location would produce greater profit? O Near raw materials O Near customers Near Raw Materials $0.90 $ 40 8,600 Near Customers $1.00 $ 45 13,300

Anstell Corporation operates a Manufacturing Division and a Marketing Division. Both divisions are evaluated as profit centers. Marketing buys products from Manufacturing and packages them for sale. Manufacturing sells many components to third parties in addition to Marketing. Selected data from the two operations follow: Capacity (units) Sales price* Variable costs + Fixed costs Manufacturing 250,000 $ 280 $ 112 $ 100,000 a. Transfer price b. Transfer price Marketing 125,000 $910 For Manufacturing, this is the price to third parties. t For Marketing, this does not include the transfer price paid to Manufacturing. per unit per unit $ 336 $ 720,000 Required: a. Current output in Manufacturing is 125,000 units. Marketing requests an additional 25,000 units to produce a special order. What transfer price would you recommend? b. Suppose Manufacturing is operating at full capacity. What transfer price would you recommend? c. Suppose Manufacturing is operating at 230,000 units. What transfer…

Assume you are the department B manager for Marley's Manufacturing. Marley's operates under a cost-based transfer structure. Assume you receive the majority of your raw materials from department A, which sells only to department B (they have no outside sales). After calculating the operating income in dollars and operating income in percentage, analyze the following financial information to determine costs that may need further investigation.

Find minimum, maximum and appropriate transfer price

6. Laura Riley manages a fleet of 225 delivery trucks for Poole Corporation. 1(Click the icon to view additional information.) Requirement 1. Which alternative will maximize Poole's short-term operating income? In order to maximize short-term operating income, Poole Corporation should because the variable cost of outsourcing to FMS results in (2) |(1) of Requirement 2. What qualitative factors should Poole consider before making a final decision? ○ A. Will laying off five employees hurt the morale and productivity of other employees remaining with Poole? ○ B. Will FMS provide speedy maintenance and repairs? ○ C. Will FMS provide the level of service Poole needs? ○ D. Will FMS quickly and satisfactorily handle calls and questions from Poole's employees who are driving the trucks? ○ E. All of the above OF. None of the above Riley performed the following analysis: 2(Click the icon to view the outsourcing decision analysis.) Read the requirements³. 1: More Info Riley must decide whether…