Compute lowest and highest acceptable transfer price, range of acceptable transfer prices, and should company transfer carried out or reject. 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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Answer 1

Question

Chapter 12A, Problem 12A.4P

1.

To determine

Compute lowest and highest acceptable transfer price, range of acceptable transfer prices, and should company transfer carried out or reject.

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 lowest and highest acceptable transfer price, range of acceptable transfer prices, and should company transfer carried out or reject if conditions are applied.

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.

3.

To determine

Compute lowest and highest acceptable transfer price, range of acceptable transfer prices, and should company transfer carried out or reject if conditions are applied.

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.

4.

To determine

Compute the lowest acceptable transfer price from A division’s perspective if conditions are applied.

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.

5.

To determine

Compute the lowest acceptable transfer price from A division’s perspective if conditions are applied.

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.

6.

To determine

Compute the lowest acceptable transfer price from A division’s perspective if conditions are applied.

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?

Question A9 A company is using a relevant costing approach in producing a price for a tender for a one-off contract. The contract needs 15kg of material Y. It currently costs £100 per kg to purchase material Y. The company has 10kg of this material in stock from a previous contract, it cost £85 per kg when purchased two years ago and it will not be used in the ordinary course of business. If it is not used for this contract the company has found a buyer for the quantity of material Y held, they are willing to pay £90 per kg for the material although it will cost £50 to pack and ship the material to the buyer. What is the relevant cost of material Y for the contract?

E18.17 (LO 3) (Sales with Returns) Refer to the revenue arrangement in E18.16. Assume that instead of selling the tool sets on credit, Steele sold them for cash. Below is the E18.16 On March 10, 2022, Steele Company sold to Barr Hardware 200 tool sets at a price of $50 each (cost $30 per set) with terms of n/60, f.o.b. shipping point. Steele allows Barr to return any unused tool sets within 60 days of purchase. Steele estimates that: (1) 10 sets will be returned, (2) the cost of recovering the products will be immaterial, and (3) the returned tools sets can be resold at a profit. On March 25, 2022, Barr returned six tool sets and received a credit to its account. Instructions 1. Prepare journal entries for Steele to record (1) the sale on March 10, 2022, (2) the return on March 25, 2022, and (3) any adjusting entries required on March 31, 2022 (when Steele prepares financial statements). Steele believes the original estimate of returns is correct.2. Indicate the income statement and…

Answer 2

Question

Chapter 12A, Problem 12A.4P

1.

To determine

Compute lowest and highest acceptable transfer price, range of acceptable transfer prices, and should company transfer carried out or reject.

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 lowest and highest acceptable transfer price, range of acceptable transfer prices, and should company transfer carried out or reject if conditions are applied.

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.

3.

To determine

Compute lowest and highest acceptable transfer price, range of acceptable transfer prices, and should company transfer carried out or reject if conditions are applied.

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.

4.

To determine

Compute the lowest acceptable transfer price from A division’s perspective if conditions are applied.

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.

5.

To determine

Compute the lowest acceptable transfer price from A division’s perspective if conditions are applied.

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.

6.

To determine

Compute the lowest acceptable transfer price from A division’s perspective if conditions are applied.

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.

Expert Solution & Answer

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Answer 3

Question

Chapter 12A, Problem 12A.4P

1.

To determine

Compute lowest and highest acceptable transfer price, range of acceptable transfer prices, and should company transfer carried out or reject.

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 lowest and highest acceptable transfer price, range of acceptable transfer prices, and should company transfer carried out or reject if conditions are applied.

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.

3.

To determine

Compute lowest and highest acceptable transfer price, range of acceptable transfer prices, and should company transfer carried out or reject if conditions are applied.

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.

4.

To determine

Compute the lowest acceptable transfer price from A division’s perspective if conditions are applied.

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.

5.

To determine

Compute the lowest acceptable transfer price from A division’s perspective if conditions are applied.

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.

6.

To determine

Compute the lowest acceptable transfer price from A division’s perspective if conditions are applied.

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.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 4

Question

Chapter 12A, Problem 12A.4P

1.

To determine

Compute lowest and highest acceptable transfer price, range of acceptable transfer prices, and should company transfer carried out or reject.

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 lowest and highest acceptable transfer price, range of acceptable transfer prices, and should company transfer carried out or reject if conditions are applied.

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.

3.

To determine

Compute lowest and highest acceptable transfer price, range of acceptable transfer prices, and should company transfer carried out or reject if conditions are applied.

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.

4.

To determine

Compute the lowest acceptable transfer price from A division’s perspective if conditions are applied.

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.

5.

To determine

Compute the lowest acceptable transfer price from A division’s perspective if conditions are applied.

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.

6.

To determine

Compute the lowest acceptable transfer price from A division’s perspective if conditions are applied.

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.

Expert Solution & Answer

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See solution

Answer 5

Chapter 12A, Problem 12A.4P

1.

To determine

Compute lowest and highest acceptable transfer price, range of acceptable transfer prices, and should company transfer carried out or reject.

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 lowest and highest acceptable transfer price, range of acceptable transfer prices, and should company transfer carried out or reject if conditions are applied.

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.

3.

To determine

Compute lowest and highest acceptable transfer price, range of acceptable transfer prices, and should company transfer carried out or reject if conditions are applied.

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.

4.

To determine

Compute the lowest acceptable transfer price from A division’s perspective if conditions are applied.

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.

5.

To determine

Compute the lowest acceptable transfer price from A division’s perspective if conditions are applied.

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.

6.

To determine

Compute the lowest acceptable transfer price from A division’s perspective if conditions are applied.

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.

Answer 6

Chapter 12A, Problem 12A.4P

1.

To determine

Compute lowest and highest acceptable transfer price, range of acceptable transfer prices, and should company transfer carried out or reject.

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.

Answer 7

Chapter 12A, Problem 12A.4P

1.

To determine

Compute lowest and highest acceptable transfer price, range of acceptable transfer prices, and should company transfer carried out or reject.

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.

Answer 8

2.

To determine

Compute lowest and highest acceptable transfer price, range of acceptable transfer prices, and should company transfer carried out or reject if conditions are applied.

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.

Answer 9

2.

To determine

Compute lowest and highest acceptable transfer price, range of acceptable transfer prices, and should company transfer carried out or reject if conditions are applied.

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.

Answer 10

3.

To determine

Compute lowest and highest acceptable transfer price, range of acceptable transfer prices, and should company transfer carried out or reject if conditions are applied.

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.

Answer 11

3.

To determine

Compute lowest and highest acceptable transfer price, range of acceptable transfer prices, and should company transfer carried out or reject if conditions are applied.

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.

Answer 12

4.

To determine

Compute the lowest acceptable transfer price from A division’s perspective if conditions are applied.

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.

Answer 13

4.

To determine

Compute the lowest acceptable transfer price from A division’s perspective if conditions are applied.

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.

Answer 14

5.

To determine

Compute the lowest acceptable transfer price from A division’s perspective if conditions are applied.

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.

Answer 15

5.

To determine

Compute the lowest acceptable transfer price from A division’s perspective if conditions are applied.

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.

Answer 16

6.

To determine

Compute the lowest acceptable transfer price from A division’s perspective if conditions are applied.

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.

Answer 17

6.

To determine

Compute the lowest acceptable transfer price from A division’s perspective if conditions are applied.

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.

Answer 18

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Answer 19

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Answer 20

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Answer 21

Ch. 12A - Prob. 12A.1E Ch. 12A - Prob. 12A.2E Ch. 12A - Prob. 12A.3E Ch. 12A - Prob. 12A.4P Ch. 12A - Prob. 12A.5P Ch. 12A - Prob. 12A.6P Ch. 12A - Prob. 12A.7C

Solution Summary: The author explains that transfer prices are the price charged on the product or service provided by a company to another department of the company.

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Chapter 12A Solutions