Division A produces a product that it sells to the outside market. It has compiled the following: Variable manufacturing cost per unit $8 Variable selling costs per unit $3 Total fixed manufacturing costs $164000 Total fixed selling costs $30000 Per unit selling price to outside buyers $56 Capacity in units per year 30000 Division B of the same company is currently buying an identical product from an outside provider for $54 per unit. It wishes to purchase 5200 units per year from Division A. Division A is currently selling 24800 units of the product per year. If the internal transfer is made, Division A will not incur any selling costs. What would be the maximum transfer price per unit that Division B would be willing to accept? $56 $9 $54 $8
Division A produces a product that it sells to the outside market. It has compiled the following: Variable manufacturing cost per unit $8 Variable selling costs per unit $3 Total fixed manufacturing costs $164000 Total fixed selling costs $30000 Per unit selling price to outside buyers $56 Capacity in units per year 30000 Division B of the same company is currently buying an identical product from an outside provider for $54 per unit. It wishes to purchase 5200 units per year from Division A. Division A is currently selling 24800 units of the product per year. If the internal transfer is made, Division A will not incur any selling costs. What would be the maximum transfer price per unit that Division B would be willing to accept? $56 $9 $54 $8
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter6: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 21E
Related questions
Question
Division A produces a product that it sells to the outside market. It has compiled the following:
Division B of the same company is currently buying an identical product from an outside provider for $54 per unit. It wishes to purchase 5200 units per year from Division A. Division A is currently selling 24800 units of the product per year. If the internal transfer is made, Division A will not incur any selling costs. What would be the maximum transfer price per unit that Division B would be willing to accept?
| Variable manufacturing cost per unit | $8 |
| Variable selling costs per unit | $3 |
| Total fixed |
$164000 |
| Total fixed selling costs | $30000 |
| Per unit selling price to outside buyers | $56 |
| Capacity in units per year | 30000 |
Division B of the same company is currently buying an identical product from an outside provider for $54 per unit. It wishes to purchase 5200 units per year from Division A. Division A is currently selling 24800 units of the product per year. If the internal transfer is made, Division A will not incur any selling costs. What would be the maximum transfer price per unit that Division B would be willing to accept?
$56
$9
$54
$8
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning