The Heating Division of Oriole International produces a heating element that it sells to its customers for $47 per unit. Its variable cost per unit is $23, and its fixed cost per unit is $8. Top management of Oriole International would like the Heating Division to transfer 15,000 heating units to another division within the company at a price of $35. Assume that the Heating Division has sufficient excess capacity to provide the 15,000 heating units to the other division. What is the minimum transfer price that the Heating Division should accept? Minimum transfer price $
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- Oat Treats manufactures various types of cereal bars featuring oats. Simmons Cereal Company has approached Oat Treats with a proposal to sell the company its top selling oat cereal bar at a price of $27,500 for 20,000 bars. The costs shown are associated with production of 20,000 oat bars currently. The manufacturing overhead consists of $3,000 of variable costs with the balance being allocated to fixed costs. Should Oat Treats make or buy the oat bars?Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all 30,000 for $240 each. Country Enterprises has approached Dimitri to buy 800 chairs for $210 each. Dimitris normal variable cost is $165 per chair, including $50 per unit in direct labor per chair. Dimitri can produce the special order on an overtime shift, which means that direct labor would be paid overtime at 150% of the normal pay rate. The annual fixed costs will be unaffected by the special order and the contract will not disrupt any of Dimitris other operations. What will be the impact on profits of accepting the order?Please show work: The Heating Division of Pronghorn International produces a heating element that it sells to its customers for $46 per unit. Its unit variable cost is $26, and its unit fixed cost is $6. Top management of Pronghorn International would like the Heating Division to transfer 14,600 heating units to another division within the company at a price of $27. Assume that the Heating Division has sufficient excess capacity to provide the 14,600 heating units to the other division. What is the minimum transfer price that the Heating Division should accept? Minimum transfer price $
- The Heating Division of Swifty International produces a heating element that it sells to its customers for $38 per unit. Its unit variable cost is $23, and its unit fixed cost is $8. Top management of Swifty International would like the Heating Division to transfer 15,400 heating units to another division within the company at a price of $31. The Heating Division is operating at full capacity. What is the minimum transfer price that the Heating Division should accept? Minimum transfer price 23The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to external customers for $32 per unit. Variable costs for the casing are $19 per unit, and fixed cost is $4 per unit. Cotwold executives would like for the Molding Division to transfer 15,000 units to the Assembly Division at a price of $24 per unit. Assume that the Molding Division has enough excess capacity to accommodate the request. Required: Should the Molding Division accept the $24 transfer price proposed by management? Calculate the effect on the Molding Division’s net income if it accepts the $24 transfer priceGermano Products, Incorporated, has a Pump Division that manufactures and sells a number of products, including a standard pump that could be used by another division in the company, the Pool Products Division, in one of its products. Data concerning that pump appear below: Capacity in units 72,500 Selling price to outside customers $ 79 Variable cost per unit $ 28 Fixed cost per unit (based on capacity) $ 32 The Pool Products Division is currently purchasing 17,000 of these pumps per year from an overseas supplier at a cost of $74 per pump. Assume that the Pump Division is selling all of the pumps it can produce to outside customers. Does there exist a transfer price that would make both the Pump and Pool Products Division financially better off than if the Pool Products Division were to continue buying its pumps from the outside supplier?
- The Windshield division of Fast Car Co. makes windshields for use in Fast Car’s Assembly division. The Windshield division incurs variable costs of $200 per windshield and has capacity to make 500,000 windshields per year. The market price is $450 per windshield. The Windshield division incurs total fixed costs of $3,000,000 per year. If the Windshield division is operating at full capacity, what transfer price should be used on transfers between the Windshield and Assembly divisions?The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to external customers for $36 per unit Variable costs for the casing are $12 per unit, and fixed cost is $5 per unit Cotwold executives would like for the Molding Division to transfer 19,000 units to the Assembly Division at a price of $30 per unit. Assume that the Molding Division has excess capacity, but the Assembly Division requires the casing to be made from a specific blend of plastics. This would raise the variable cost per unit to $33 Required: 1. Should the Molding Division accept the $30 transfer price proposed by management? 2. Determine the minimum transfer price that it will accept. 3. Determine the mutually beneficial transfer price so that the two divisions equally split the profits from the transferThe Windshield division of Fast Car Co. makes windshields for use in Fast Car’s Assembly division. The Windshield division incurs variable costs of $240 per windshield and has capacity to make 630,000 windshields per year. The market price is $475 per windshield. The Windshield division incurs total fixed costs of $3,050,000 per year. If the Windshield division is operating at full capacity, what transfer price should be used on transfers between the Windshield and Assembly divisions? he Windshield division of Fast Car Co. makes windshields for use in Fast Car’s Assembly division. The Windshield division incurs variable costs of $240 per windshield and has capacity to make 630,000 windshields per year. The market price is $475 per windshield. The Windshield division incurs total fixed costs of $3,050,000 per year.If the Windshield division is operating at full capacity, what transfer price should be used on transfers between the Windshield and Assembly divisions?…
- Quest Motors, Inc., operates as a decentralized multidivision company. The Vivo division of Quest Motors purchases most of its airbags from the airbag division. The airbag division’s incremental cost for manufacturing the airbags is $90 per unit. The airbag division is currently working at 80% of capacity. The current market price of the airbags is $125 per unit. Q. Suppose that Quest Motors requires that whenever divisions with unused capacity sell products internally, they must do so at the incremental cost. Evaluate this transfer-pricing policy using the criteria of goal congruence, evaluating division performance, motivating management effort, and preserving division autonomyGermano Products, Incorporated, has a Pump Division that manufactures and sells a number of products, including a standard pump that could be used by another division in the company, the Pool Products Division, in one of its products. Data concerning that pump appear below: Capacity in units 70,000 Selling price to outside customers $ 77 Variable cost per unit $ 27 Fixed cost per unit (based on capacity) $ 31 The Pool Products Division is currently purchasing 16,000 of these pumps per year from an overseas supplier at a cost of $72 per pump. Assume that the Pump Division is selling all of the pumps it can produce to outside customers. Does there exist a transfer price that would make both the Pump and Pool Products Division financially better off than if the Pool Products Division were to continue buying its pumps from the outside supplier? Multiple Choice Yes, both divisions are always better off regardless of whether the selling division has enough idle…Division X of Charter Corporation makes and sells a single product that's used by manufacturers of forklift trucks. Presently it sells 12,000 units per year to outside customers at $24 per unit. The annual capacity is 20,000 units, and the variable cost to make each unit is $16. Division Y of Charter Corporation would like to buy 10,000 units a year from Division X to use in its products. There would be no cost savings from transferring the units within the company rather than selling them on the outside market. What should be the lowest acceptable transfer price from the perspective of Division X?