MANAGERIAL ACCOUNTING (LL+CONNECT)
17th Edition
ISBN: 9781266062148
Author: Garrison
Publisher: MCG CUSTOM
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Question
Chapter 11, Problem 26C
1.
To determine
Introduction:
Transfer price is the price at which goods and services are transferred between divisions in an organization. The price charged to transfer goods and services is recorded as an expense in the buying division and revenue in the selling division.
The lowest transfer price acceptable by Electrical Division. Also, determine whether the Electrical division supplies the units to the Brake division.
2.
To determine
Introduction:
Transfer price is the price at which goods and services are transferred between divisions in an organization. The price charged to transfer goods and services is recorded as an expense in the buying division and revenue in the selling division.
The financial advantage or disadvantage for the company as a whole if the Electrical Division sells units to the Brake Division.
3.
To determine
Introduction:
Transfer price is the price at which goods and services are transferred between divisions in an organization. The price charged to transfer goods and services is recorded as an expense in the buying division and revenue in the selling division.
The highest transfer price acceptable by Beta Division. Also, determine at what transfer price both the division manager agree to transfer the supplies.
4.
To determine
Introduction:
Transfer price is the price at which goods and services are transferred between divisions in an organization. The price charged to transfer goods and services is recorded as an expense in the buying division and revenue in the selling division.
The organizational behavior problem and the advice to the president of the company.
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Students have asked these similar questions
Chapter: Traditional Performance Measurement Systems & Transfer Pricing (Managerial Accounting)
Q) Spark Ltd has two divisions, assembly and electrical. The assembly division transfers partially completed components to the electrical division at predetermined transfer price. The assembly division’s standard variable production cost per unit is $550. This division has spare capacity, and it could sell all its components to outside buyers at $680 per unit in a perfectly competitive market.
Requirement:
Explain how negotiation between the supplying and buying units may be used to set transfer prices. How does this relate to the general transfer pricing rule? (Max 200 words)
Starcic Products, Incorporated, has a Connector Division that manufactures and sells a number of products, including a standard
connector. Data concerning that connector appear below:
Capacity in units
Selling price to outside customers
Variable cost per unit
Fixed cost per unit (based on capacity)
45,900
$95.00
$ 61.50
$15.00
The company has a Transmission Division that needs 6,900 special heavy-duty connectors per year. The Connector Division's variable
cost to manufacture and ship this special connector would be $66,50 per unit. Making these special connectors would require more
manufacturing resources. Therefore, the Connector Division would have to reduce its production and sales of regular connectors to
outside customers from 45,900 units per year to 38,850 units per year.
Required:
As far as the Connector Division is concerned, what is the lowest acceptable transfer price for the special connectors?
Note: Round your answer to 2 decimal places.
Lowest acceptable transfer price
Sandpiper Inc. has a division that manufactures a component that sells for $165 and has a variable cost of $45. Another division of the company wants to purchase the component
Fixed cost per unit of the component is $20. What is the minimum transfer price if the division is operating at capacity?
OA. $165
OB. $45
OC. $20
OD. $65
Chapter 11 Solutions
MANAGERIAL ACCOUNTING (LL+CONNECT)
Ch. 11 - Prob. 1QCh. 11 - Prob. 2QCh. 11 - Prob. 3QCh. 11 - Prob. 4QCh. 11 - Prob. 5QCh. 11 - Prob. 6QCh. 11 - Prob. 7QCh. 11 - Prob. 8QCh. 11 - Prob. 9QCh. 11 - Prob. 10Q
Ch. 11 - Prob. 1AECh. 11 - Prob. 2AECh. 11 - Prob. 1F15Ch. 11 - Prob. 2F15Ch. 11 - Prob. 3F15Ch. 11 - Prob. 4F15Ch. 11 - Prob. 5F15Ch. 11 - Prob. 6F15Ch. 11 - Prob. 7F15Ch. 11 - Prob. 8F15Ch. 11 - Prob. 9F15Ch. 11 - Prob. 10F15Ch. 11 - Prob. 11F15Ch. 11 - (
$1,000,000
300,000
700,000
500.000
$
200,000
...Ch. 11 - Prob. 13F15Ch. 11 - Prob. 14F15Ch. 11 - Prob. 15F15Ch. 11 - Prob. 1ECh. 11 - Prob. 2ECh. 11 - Prob. 3ECh. 11 - Prob. 4ECh. 11 - Prob. 5ECh. 11 - Prob. 6ECh. 11 - Prob. 7ECh. 11 - Prob. 8ECh. 11 -
EXERCISE 11-9 Return on Investment (ROI) and...Ch. 11 - Prob. 10ECh. 11 - Prob. 11ECh. 11 - Prob. 12ECh. 11 - Prob. 13ECh. 11 - Prob. 14ECh. 11 - Prob. 15ECh. 11 - Prob. 16ECh. 11 - Prob. 17PCh. 11 - Prob. 18PCh. 11 - Prob. 19PCh. 11 - Prob. 20PCh. 11 - Prob. 21PCh. 11 - Prob. 22PCh. 11 - Prob. 23PCh. 11 - Prob. 24PCh. 11 - Prob. 25PCh. 11 - Prob. 26C
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- Division A of SLG Company produces a part it sells to other companies. Sales and cost data for the part are as follows: Capacity in units 60,000 units Selling price per unit O $27 per unit O $39 per unit O $36 per unit O $41 per unit Variable cost per unit O None of the above. Fixed cost per unit at capacity Division B, another division of SLG Company, would like to buy this part from Division A. Division B is currently purchasing the part from an outside source at $38 per unit. If Division A sells to Division B, then $1 in Division A's variable costs can be avoided. Assume Division A has enough idle capacity to handle all of Division B's needs without any increase in fixed costs and without interfering with outside sales. According to the transfer pricing guidelines, what is the lowest acceptable transfer price from the perspective of Division A? $40 per unit $28 per unit $9 per unitarrow_forwardDivision A makes a part with the following characteristics: Production capacity in units Selling price to outside customers Variable cost per unit Total fixed costs $ $ 30,200 units 22 17 $102,900 Division B, another division of the same company, would like to purchase 17,300 units of the part each period from Division A. Division B is now purchasing these parts from an outside supplier at a price of $20 each. Suppose that Division A has ample idle capacity to handle all of Division B's needs without any increase in fixed costs and without cutting into sales to outside customers. If Division A refuses to accept the $20 price internally and Division B continues to buy from the outside supplier, the company as a whole will be:arrow_forward(Appendix 11A) Division A makes a part that it sells to customers outside of the company. Data concerning this part appear below: $40 $30 $10,000 20,000 Selling Price to Outside Customers Variable cost per Unit Total Fixed Costs Capacity in Units Division B of the same company would like to use the part manufactured by Division A in one of its products. Division B currently purchases a similar part made by an outside company for $38 per unit and would substitute the part made by Division A. Division B requires 5,000 units of the part each period. Division A has ample capacity to produce the units for Division B without any increase in fixed costs and without cutting into sales to outside customers. If Division A sells to Division B rather than to outside customers, the variable cost per unit would be $1 lower. What should be the lowest acceptable transfer price from the perspective of Division A? Multiple Choice $40. $30. $29.arrow_forward
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