6 In Each Of The Cases Below Assume That Division X Has A Product That Can Be Sold Either To Outside Customers Or To Di 1 (56.83 KiB) Viewed 81 times
6 In Each Of The Cases Below Assume That Division X Has A Product That Can Be Sold Either To Outside Customers Or To Di 2 (44.14 KiB) Viewed 81 times
6 In each of the cases below, assume that 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: Case 15 points 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 100,000 100,000 $50 $38 $8 100,000 80,000 $35 $20 $6 Boo 20,00 $47 20,000 $34 Required: 1a. Refer to the data in case A above. Assume that $2 per unit in variable selling costs can be avoided on intracompany sales. Determine the transfer price of the selling division Transfer price 48 1-b. If the managers are free to negotiate and make decisions on their own, wil a transfer take place? Yos No 2-4. Refer to the data in case B above. In this case there will be no reduction in variable selling costs on intracompany sales. Determine the transfer price of the selling division The price 2-b. If the managers are free to negotiate and make decisions on their own wil a transfer take place? Yes No 2-c. What is the range of transfer price the managers of both divisions should agree?
6 VIVISION XI Capacity in units Nunber of units being sold to outside custoners Selling price per unit to outside customers 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 100,000 189,00 $50 $30 58 20.000 $47 108,00 Be, $35 $20 $6 20,000 $34 15 pois Required: 1-a. Refer to the data in case A above. Assume that $2 perunt in variable selling costs can be avoided on intracompany sales Determine the transfer price of the selling division book Transfer price 5 48 1-b. If the managers are free to negotiate and make decisions on their own, wilt a transfer take place? Yes No 2-a. Refer to the data in case B above. In this case there will be no reduction in variable selling costs on intracompany sales Determine the transfer price of the selling division Transfer price 26. the manager are free to negotiate and make decisions on their own, wil a transfer take place? Yes No 2.c. What is the range of transfer price the managers of both divisions should agree? The Transfer price can be a wont of od Alghero
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