MANAGERIAL ACCT.F/MANAGERS>CUSTOM<
4th Edition
ISBN: 9781307090147
Author: Noreen
Publisher: MCG/CREATE
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Chapter 12A, Problem 12A.2E
1.
To determine
Compute the income statement of Division A, Division B, and company as a whole.
Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.
2.
To determine
Compute the income statement of Division A if manufacturing capacity is 20,000 circuit boards, Division B if it purchase 5,000 circuits boards instead of 4,000 , and company as a whole.
Introduction: Transfer prices means the price charged on the product or service provided by on department of the company to another department of the company. Divisions are evaluated on the profit basis, or residual income price must be fixed for the transfer. Prices charged in these situations are referred as transfer prices.
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H 3
Assume that the external supplier reduced the selling price to $700 per unit of XT86 to the Products Division. The Components Division reduced the price for external customers to $800, but sales to external customers could be increased only to 45,000 units of XT86. Products Division wants to acquire as many as 20,000 units if the transfer price is acceptable. For simplicity assume that there is no external market for the final 5,000 units of Components Division’s capacity.
a) Using the general guideline, what is (are) the minimum transfer price (s) that should lead to the correct economic decision? Ignore performance evaluation considerations.
b) What is the range between the minimum and maximum transfer price the managers of component and products divisions can negotiate the final TP?
hw6 q9
Federated Manufacturing Incorporated (FMI) produces electronic components in three divisions: industrial, commercial, and consumer products. The commercial products division annually purchases 10,600 units of part 23–6711, which the industrial division produces for use in manufacturing one of its own products. The commercial division is growing rapidly; it is expanding its production and now wants to increase its purchases of part 23–6711 to 15,600 units per year. The problem is that the industrial division is at full capacity. No new investment in the industrial division has been made for some years because top management sees little future growth in its products, so its capacity is unlikely to increase soon.
The commercial division can buy part 23–6711 from Advanced Micro Incorporated or from Admiral Electric, a customer of the industrial division now purchasing 680 units of part 88–461. The industrial division's sales to Admiral would not be affected by the commercial…
Answer 1234 with solution
Alexi Division of Dezi Company makes and sells only one product. Annual data on Alexi division’s single products follows:
Unit selling price ............................. P50
Unit variable cost ............................. 30
Total fixed costs .............................P200,000
Average operating assets ............... 750,000
Minimum required rate of return ........ 12%
If Alexi sells 15,000 units per year, how much is the residual income?
If Alexi sells 16,000 units per year, what is the return on investment?
Suppose the manager of Alexi division desires a return on investment of 22%. In order to achieve this goal, how many units per year Alexi division must sell?
Suppose the manager of Alexi division desires an annual residual income of P45,000. In order to achieve this, how many units Alexi division should sell?
Chapter 12A Solutions
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