Required Information The Following Information Applies To The Questions Displayed Below In Each Of The Cases Below 1 (243.3 KiB) Viewed 38 times
Required Information The Following Information Applies To The Questions Displayed Below In Each Of The Cases Below 2 (297.56 KiB) Viewed 38 times
! Required information [The following information applies to the questions displayed below.] In each of the cases below, assume Division X has a product that can be sold either to outside customers or to Division Y of the same company for use in its production process. The managers of the divisions are evaluated based on their divisional profits. Division X: Capacity in units Number of units being sold to outside customers Selling price per unit to outside customers Variable costs per unit Fixed costs per unit (based on capacity) Division Y: Number of units needed for production Purchase price per unit now being paid to an outside supplier Case A 200,000 200,000 $90 $ 70 $13 40,000 $ 86 B 200,000 160,000 $75 $ 60 $8 40,000 $ 74 Required: 2. Refer to the data in case B above. In this case, there will be no savings in variable selling costs on intracompany sales. a. What lowest accep ble transfer price om the perspectiv of the selling division? b. What is the highest acceptable transfer price from the perspective of the buying division? c. What is the range of acceptable transfer prices (if any) between the two divisions? If the managers are free to negotiate and make decisions on their own, will a transfer probably take place?
Complete this question by entering your answers in the tabs below. Req 2A X Answer is complete but not entirely correct. Req 2B Req 2C What is the range of acceptable transfer prices (if any) between the two divisions? If the managers are free to negotiate and make decisions on their own, will a transfer probably take place? Identify the range of acceptable transfer prices (if any): There is not a range of acceptable transfer prices. There is a range of acceptable transfer prices as shown below: $ (60) s Are the managers likely to agree on a transfer price? Yes No Transfer price S $ (74)
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