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worty [1.4K]
3 years ago
7

Division A does not have excess capacity to produce Product XX. The division can sell Product XX for $10 per unit outside the co

mpany. Variable costs are $6 per unit. Division B wants to purchase Product XX from Division A to use in Product ZZ. The selling price of Product ZZ is $25 per unit and variable costs to finish the product after the transfer are $12 per unit. An outside supplier will sell Product XX for $12 per unit. What is the minimum transfer price for Division A
Business
1 answer:
3241004551 [841]3 years ago
4 0

Answer:

Minimum transfer price = $10

Explanation:

<em>The  Division A is operating at full capacity, hence it has no excess capacity </em>

<em>This implies that it can not produce enough to meet both the internal demand (from Division B) and external buyers.  </em>

<em>Hence, it implies that Division A can not accommodate the demands of the  Division B at a price lower than the external price of $10. Any price lower than $10 would  result into a loss in contribution. </em>

To maximize and optimize the group profit

Minimum transfer price = External selling price at which Division A can sell product XX

Minimum transfer price = $10

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According to the principles of supply and demand,  the price of a product increases, the amount supplied will also increase because there is positive relationship between price and quantity supplied.

<h3>Why when price increases supply also increases?</h3>

Economists States that there is a positive relationship between price and quantity supplied—that means a higher price leads to a higher quantity supplied and a lower price leads to a lower quantity supplied.

Principle of supply states that at a higher price, a producer is willing to produce more of a good.

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6 0
2 years ago
According to a 2000 public opinion poll, 69 percent of americans who responded were most proud of the nation’s
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According to a 2000 public-opinion poll, 69 percent of Americans who responded were most proud of the nation's equal opportunity laws.


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8 0
3 years ago
Pat maninen earns a gross salary of $3,000 each week. assume a rate of 6.2% on $118,500 for social security and 1.45% for medica
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Explanation:

Since the given rate for Social security is 6.2%, the first week deduction is 6.2% of gross weekly salary, which is $3,000. Hence, the first week deduction for Social Security is given by

Social Security Deduction = 6.2% of $3,000
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Similarly, since 1.43% is the given rate for medicare, the first week deduction is 1.43% of the gross weekly salary, which is $3,000. Thus, the first week deduction for medicare is given by

Medicare Deduction = 1.43% of $3,000 
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7 0
3 years ago
The National Bank Act of 1864 established the national banking system in the United States. The Act still governs U.S. national
Andrew [12]

Answer:

The answer is True

Explanation:

4 0
4 years ago
You are considering investing in a security that will pay you $80 in interest at the end of each of the next 10 years. If this s
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Answer:

the internal rate of return is 6%

Explanation:

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Given that

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= IRR()

After applying the internal rate of return formula, the internal rate of return is 6%

Hence, the internal rate of return is 6%

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3 years ago
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