Two possible transfer prices (for 4,000 units) are under consideration by the two divisions: P35 and P40. What would be the effect on corporate profit if P35 is selected as the transfer price rather than P40, and the Computer Division purchases from the Computer Chip Division instead of from the external supplier? * Computer Solutions Corporation manufactures and sells various high-tech office automation products. Two divisions of Computer Solutions Corporation are the Computer Chip Division and the Computer Division. The Computer Chip Division manufactures one product, a "super chip," that can be used by both the Computer Division and other external customers. The following information is available on this month's operations in the Computer Chip Division: Selling price per chip Variable costs per chip Fixed production costs Fixed SG&A costs P50 P20 P60,000 P90,000 10,000 chips 6,000 chips O chips Monthly capacity External sales Internal sales Presently, the Computer Division purchases no chips from the Computer Chips Division, but instead pays P45 to an external supplier for the 4,000 chips it needs each month. O 20,000 smaller O 20,000 larger O 100,000 larger the same
Two possible transfer prices (for 4,000 units) are under consideration by the two divisions: P35 and P40. What would be the effect on corporate profit if P35 is selected as the transfer price rather than P40, and the Computer Division purchases from the Computer Chip Division instead of from the external supplier? * Computer Solutions Corporation manufactures and sells various high-tech office automation products. Two divisions of Computer Solutions Corporation are the Computer Chip Division and the Computer Division. The Computer Chip Division manufactures one product, a "super chip," that can be used by both the Computer Division and other external customers. The following information is available on this month's operations in the Computer Chip Division: Selling price per chip Variable costs per chip Fixed production costs Fixed SG&A costs P50 P20 P60,000 P90,000 10,000 chips 6,000 chips O chips Monthly capacity External sales Internal sales Presently, the Computer Division purchases no chips from the Computer Chips Division, but instead pays P45 to an external supplier for the 4,000 chips it needs each month. O 20,000 smaller O 20,000 larger O 100,000 larger the same
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter10: Evaluating Decentralized Operations
Section: Chapter Questions
Problem 17E: Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside...
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Transcribed Image Text:Two possible transfer prices (for 4,000 units) are under consideration by
the two divisions: P35 and P40. What would be the effect on corporate
profit if P35 is selected as the transfer price rather than P40, and the
Computer Division purchases from the Computer Chip Division instead of
from the external supplier? *
Computer Solutions Corporation manufactures and sells various high-tech office automation products.
Two divisions of Computer Solutions Corporation are the Computer Chip Division and the Computer
Division. The Computer Chip Division manufactures one product, a "super chip," that can be used by
both the Computer Division and other external customers. The following information is available on this
month's operations in the Computer Chip Division:
Selling price per chip
Variable costs per chip
Fixed production costs
Fixed SG&A costs
Monthly capacity
External sales
P50
P20
P60,000
P90,000
10,000 chips
6,000 chips
O chips
Internal sales
Presently, the Computer Division purchases no chips from the Computer Chips Division, but instead
pays P45 to an external supplier for the 4,000 chips it needs each month.
O 20,000 smaller
O 20,000 larger
O 100,000 larger
O the same
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