Financial and Managerial Accounting - With CengageNow
14th Edition
ISBN: 9781337577809
Author: WARREN
Publisher: CENGAGE L
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Question
Chapter 23, Problem 23.20EX
(a)
To determine
Transfer price: The price charged for the goods and services transferred among the divisions is referred to as transfer price.
Approaches for setting transfer prices:
- Market price approach
- Negotiated price approach
- Cost price approach
To determine: The increase in Industries XP income from operations as a result of transfer pricing
(b)
To determine
The increase in I Division’s income from operations as a result of transfer pricing
(c)
To determine
The increase in C Division’s income from operations as a result of transfer pricing
(d)
To determine
The range of transfer price, if negotiated price approach is used.
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Students have asked these similar questions
1. Determine the minimum transfer price that Cutting Division would accept.
2. Determine the maximum transfer price that the Assembly Division would pay.
3. If Cutting Division will accept the offer of Assembly Division, how much is the change in its operating income ?
4. If Cutting Division will make a counter offer of P45.25 per part, how much is the change in the operating income of Assembly Division assuming that its external supplier could not supply its needed quantity?
Patron Bhd. is a company operating in an upstream exploration and production, focusing on
the acquisition, exploration and development of properties for the production of crude oil and
natural gas from underground reservoirs. The company has two divisions: Transportation and
Refining. Transportation division purchases crude oil in shallow waters offshore of Peninsular
Malaysia and sends it to Melaka oil refinery. Refining division processes crude oil into gasoline.
The following data is available for both divisions:
Transportation Division:
Variable cost per barrel of crude oil
RM
350.00
Fixed cost per barrel of crude oil
150.00
Total
500.00
Refining Division:
RM
Variable cost per barrel of gasoline
700.00
Fixed cost per barrel of gasoline
Total
500.00
1,200.00
Additional information:
* The company pipeline can carry 55,000 barrels per day. The external market price for
supplying crude oil per barrel is RM750.00.
* The Refining Division of Patron Bhd. is currently purchasing crude oil…
Compute the following :-
1. Calculate the lowest acceptable transfer price for the seller (Division A)?
2. Calculate the highest acceptable transfer price for the buyer (Division B)?
3. Calculate the range of acceptable transfer prices between the two divisions?
4. Assume Division A offers to sell 15,000 units to Division B for $74 and that Division B refuses this price. What will be the loss in potential prodits for the company whole as a whole
Chapter 23 Solutions
Financial and Managerial Accounting - With CengageNow
Ch. 23 - Prob. 1DQCh. 23 - Differentiate between a profit center and an...Ch. 23 - Weyerhaeuser developed a system that assigns...Ch. 23 - What is the major shortcoming of using income from...Ch. 23 - In a decentralized company in which the divisions...Ch. 23 - How does using the return on investment facilitate...Ch. 23 - Why would a firm use a balanced scorecard in...Ch. 23 - Prob. 8DQCh. 23 - When is the negotiated price approach preferred...Ch. 23 - When using the negotiated price approach to...
Ch. 23 - Budgetary performance for cost center Vinton...Ch. 23 - Service department charges The centralized...Ch. 23 - Income from operations for profit center Using the...Ch. 23 - Profit margin, investment turnover, and ROI Briggs...Ch. 23 - Residual income The Commercial Division of Galena...Ch. 23 - Transfer pricing The materials used by the...Ch. 23 - Budget performance reports for cost centers...Ch. 23 - Divisional income statements The following data...Ch. 23 - Service department charges and activity bases For...Ch. 23 - Service department charges In divisional income...Ch. 23 - Service department charges and activity bases...Ch. 23 - Divisional income statements with service...Ch. 23 - Prob. 23.8EXCh. 23 - Profit center responsibility reporting XSport...Ch. 23 - Return on investment The income from operations...Ch. 23 - Prob. 23.11EXCh. 23 - Determining missing items in return on investment...Ch. 23 - Profit margin, investment turnover, and return on...Ch. 23 - Prob. 23.14EXCh. 23 - Prob. 23.15EXCh. 23 - Determining missing items from computations Data...Ch. 23 - Prob. 23.17EXCh. 23 - Building a balanced scorecard Hit-n-Run Inc. owns...Ch. 23 - Decision on transfer pricing Materials used by the...Ch. 23 - Prob. 23.20EXCh. 23 - Prob. 23.1APRCh. 23 - Profit center responsibility reporting for a...Ch. 23 - Divisional income statements and return on...Ch. 23 - Effect of proposals on divisional performance A...Ch. 23 - Divisional performance analysis and evaluation The...Ch. 23 - Prob. 23.6APRCh. 23 - Budget performance report for a cost center The...Ch. 23 - Profit center responsibility reporting for a...Ch. 23 - Divisional income statements and return on...Ch. 23 - Effect of proposals on divisional performance A...Ch. 23 - Divisional performance analysis and evaluation The...Ch. 23 - Prob. 23.6BPRCh. 23 - Prob. 1ADMCh. 23 - Domino's Pizza: Franchise segment return on...Ch. 23 - Prob. 3ADMCh. 23 - Prob. 23.1TIFCh. 23 - Prob. 23.3TIF
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Similar questions
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