MANAGERIAL ACCOUNTING
16th Edition
ISBN: 9781260901320
Author: Garrison
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Textbook Question
Chapter 11.A, Problem 2E
EXERCISE 11A-2 Transfer Pricing from the Viewpoint of the Entire Company LO11-5
Division A manufactures electronic circuit boards. The boards can be sold either to Division B of the same company or to outside customers. Last year, the following activity occurred in Division A:
Sales to Division B were at the same price as sales to outside customers. The circuit boards purchased by Division B were used in an electronic instrument manufactured by that division (one board per instrument). Division B incurred $100 in additional variable cost per instrument and then sold the instruments for $300 each.
Required:
- Prepare income statements for Division A. Division B, and the company as a whole.
- Assume Division A’s manufacturing capacity is 20,000 circuit boards. Next year, Division B wants to purchase 5,000 circuit boards from Division A rather than 4,000. (Circuit boards of this type are not available from outside sources.) From the standpoint of the company as a whole, should Division A sell the 1,000 additional circuit boards to Division B or continue to sell them to outside customers? Explain.
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Week 4 Assignment Transfer Data
The Better Chair Company manufactures high-end chairs in alpha division in a country
with a 35% income tax rate and transfers these chairs to beta division in a country with
a 40% income tax. An import duty of 10% of the transfer price is paid on all imported
products. The import duty is not deductible in computing taxable income. The fixed cost
for a high-end chair is $300 and the variable cost is $650, which brings the full cost (i.e.,
total cost) for each chair to $950. They are sold by beta division for $1050. The tax
authorities in both countries allow firms to use either variable cost or full cost as the
transfer price.
Alpha Division Taxes:
Transfer Price
Less (subtract) Cost
Taxable Income
Taxes (or refund)
Beta Division Taxes:
Sales Price
Less (subtract) Transfer Price
Taxable Income
Income Taxes
Import Duty
Taxes (or refund)
Total Taxes
Show Transcribed Text
=
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Full Cost
0
0
4G
100.00 vop
KB/S LTE 4…
Exercise 15-32 (Algo) International Transfer Prices (LO 15-4)
San Jose Company operates a Manufacturing Division and an Assembly Division. Both divisions are evaluated as profit centers. Assembly buys components from Manufacturing and assembles them for sale. Manufacturing sells many components to third parties in addition to Assembly. Selected data from the two operations follow.
Manufacturing
Assembly
Capacity (units)
402,000
202,000
Sales pricea
$
404
$
1,310
Variable costsb
$
170
$
484
Fixed costs
$
40,020,000
$
24,020,000
a For Manufacturing, this is the price to third parties.
b For Assembly, this does not include the transfer price paid to Manufacturing.
Suppose Manufacturing is located in Country A with a tax rate of 70 percent and Assembly in Country B with a tax rate of 30 percent. All other facts remain the same.
Required:
a. Current production levels in Manufacturing are 202,000 units. Assembly requests an additional…
QS 22-19 (Algo) Determining transfer prices with excess capacity LO C1
The Windshield division of Jaguar Company makes windshields for use in its Assembly division. The Windshield division incurs
variable costs of $296 per windshield and has capacity to make 590,000 windshields per year. The market price is $520 per
windshield. The Windshield division incurs total fixed costs of $3,750,000 per year.
If the Windshield division has excess capacity, what is the range of possible transfer prices that could be used on transfers between
the Windshield and Assembly divisions?
Transfer price per windshield will be at least
but not more than
Drav
Chapter 11 Solutions
MANAGERIAL ACCOUNTING
Ch. 11.A - Prob. 1ECh. 11.A - EXERCISE 11A-2 Transfer Pricing from the Viewpoint...Ch. 11.A - EXERCISE 11A-3 Transfer Pricing Situations LO11-5...Ch. 11.A - PROBLEM 11A-4 Transfer Price with an Outside...Ch. 11.A - Prob. 5PCh. 11.A - Prob. 6PCh. 11.A - Prob. 7CCh. 11.B - EXERCISE 11B-1 Service Department Charges L011-6...Ch. 11.B - Prob. 2ECh. 11.B - Prob. 3E
Ch. 11.B - Prob. 4PCh. 11.B - Prob. 5PCh. 11 - Prob. 1QCh. 11 - Prob. 2QCh. 11 - Prob. 3QCh. 11 - Prob. 4QCh. 11 - Prob. 5QCh. 11 - Prob. 6QCh. 11 - What is the difference between delivery cycle time...Ch. 11 - Prob. 8QCh. 11 - Prob. 9QCh. 11 - Prob. 10QCh. 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 - EXERCISE 11-3 Measures of Internal Business...Ch. 11 -
EXERCISE 11-4 Building a Balanced Scorecard...Ch. 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. 14PCh. 11 - Prob. 15PCh. 11 - Prob. 16PCh. 11 - Prob. 17PCh. 11 - Prob. 18PCh. 11 - Prob. 19PCh. 11 - Prob. 20PCh. 11 - PROBLEM 11-21 Creating Balanced Scorecards that...Ch. 11 - Prob. 22PCh. 11 - CASE 11-23 Balanced Scorecard L011-4
Haglund...
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