1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
elena55 [62]
3 years ago
12

3. Assume that the Appliance Division is operating at 75 percent capacity. The Manufactured Housing Division is currently buying

4,000 dishwashers from an outside supplier for $290 each. Assume that any joint benefit will be split evenly between the two divisions. What is the expected transfer price
Business
1 answer:
OverLord2011 [107]3 years ago
4 0

This question is incomplete, the complete question is;

Transfer Pricing: Various Computations

Corning Company has a decentralized organization with a divisional  structure. Two of these divisions are the Appliance Division and the Manufactured Housing Division. Each divisional manager is evaluated on the basis of ROI.

The Appliance Division produces a small automatic dishwasher that the Manufactured Housing Division can use in one of its models. Appliance can produce up to 20,000 of these dishwashers per year. The variable costs of manufacturing the dishwashers are $98.The Manufactured Housing Division inserts the dishwasher into the model house and then sells the manufactured house to outside customers for $73,000 each. The division's capacity is 4,000 units. The variable costs of the manufactured house (in addition to the cost of the dishwasher itself) are $42,600.  

Required:

Assume each part is independent, unless otherwise indicated.

1) Assume that all of the dishwashers produced can be sold to external customers for $320 each. The Manufactured Housing Division wants to buy 4,000 dishwashers per year. What should the transfer price be?

2) Refer to Requirement 1. Assume $24 of avoidable distribution costs. Identify the maximum and minimum transfer prices.  

3) Assume that the Appliance Division is operating at 75 percent capacity. The Manufactured Housing Division is currently buying 4,000 dishwashers from an outside supplier for $290 each. Assume that any joint benefit will be split evenly between the two divisions. What is the expected transfer price?

Answer:

a) The transfer price TP is the market ( $ 320 )

b)

- minimum transfer price : $ 296

- maximum transfer price : $ 320

c) the expected transfer price is $ 194

Explanation:

Given the data in the question;

a) What should the transfer price be?

The transfer price TP is the market ( $ 320 ) as all the dishwashers produced will be sold to the external customers for $ 320 .

b) Identify the maximum and minimum transfer prices?

Refer to question 1 above and assuming $24 of avoidable distribution costs.

the maximum and minimum transfer prices will be;

- minimum transfer price : $ 320 - $ 24 = $ 296

- maximum transfer price : $ 320

c) What is the expected transfer price?

given that; the variable costs of manufacturing the dishwashers are $98.

The Manufactured Housing Division is currently buying 4,000 dishwashers from an outside supplier for $290 each.

so potential gain = $290 - $98

= $ 192

thus, share of gain of each division will be;

⇒ $ 192 / 2 = $ 96

so the transfer price will be;

⇒ $ 98 + $ 96

= $ 194

Therefore, the expected transfer price is $ 194

You might be interested in
Assuming that periodic inventory records are kept, the ending inventory on a LIFO basis is Group of answer choices $16,440. $17,
Troyanec [42]

Answer:

$16,440.

Explanation:

Please find attached the data used in answering this question

LIFO means last in first out. It means that it is the last purchased inventory that is the first to be sold.

the ending inventory would consist of earlier purchased goods

total sales is 20800

total purchases = 26,000

ending inventory = 26,000 - 20800 = 5200

this price of the ending inventory = 3200 x 3.2) + (2000 x 3.1) = $16,440.

                               

7 0
2 years ago
When is allocative efficiency of a product achieved?
larisa86 [58]
Allocative efficiency of a product is achieved when parties are able to use the accurate and readily available data reflected in the market to make decisions about how to utilize their resources
3 0
2 years ago
A firm is planning on increasing its annual dividend by 3.50% a year in perpetuity. The company just paid its annual dividend in
uysha [10]

Answer:

c.) $1.73

Explanation:

Price = \frac{D0(1+g)}{(r-g)}

D0= Last dividend paid

r= rate of return

g = growth rate

Price = \frac{0.20(1.035)}{(0.1550-0.035)}

Price = 0.207 / 0.12

Price = 1.725

Therefore, the current value of the stock is $1.73

5 0
3 years ago
Consider the following information for the manufacturing cell of Stripes Company: Maximum units produced in a quarter 250,000 un
svetoff [14.1K]

Answer: Theoretical velocity = 5 units per hour.

Actual velocity = 4 units per hour.

Explanation:

Based on the information given in the question, the theoretical velocity will be:

Firstly, we'll calculate the theoretical cycle time which will be:

= (50,000 hours x 60 minutes per hour) / 250,000 units

= 12 minutes per unit

Actual cycle time will be:

= (50,000 hours x 60 minutes per hour) / 200,000 units

= 15 minutes per unit

The theoretical velocity:

= 60 minutes / 12 minutes

= 5 units per hour.

2. The e actual velocity in units per hour:

= 60 minutes per hour / 15 minutes per unit

= 4 units per hour

3 0
2 years ago
Ellie and Brendan both produce apple pies and vanilla ice cream. If Ellie’s opportunity cost of one apple pie is 1/2 gallon of i
Sav [38]

Answer: True

Explanation: Opportunity cost this is the profit lost when one alternative is selected over another based on choice. It's helps us examine all possible alternative before taking decisions. Ellie's has a competitive advantage in Ice cream production due it's opportunity cost for its next best alternative which is half (1/2) for ice cream compared to Brendan's one quarter (1/4) for same product.

3 0
3 years ago
Read 2 more answers
Other questions:
  • Mackenzie, a successful store manager, leads her employees by encouraging them and showing that she genuinely believes in them.
    6·1 answer
  • TunaCo purchases 25% of Stanley, Inc. on January 1 of the current year for $500,000. This acquisition gives TunaCo the ability t
    15·1 answer
  • True or false in addition to several short term effects of alcohol or drugs on the body other negative physiological physical ps
    12·1 answer
  • Which of the following reflects a true relationship between making decisions and reaching objectives
    13·1 answer
  • Select the correct answer.
    11·1 answer
  • WACC and Optimal Capital Structure F. Pierce Products Inc. is considering changing its capital structure. F. Pierce currently ha
    12·1 answer
  • Which of the answer choices shows the correct punctuation? if managers don't prepare for international business trips, by learni
    9·1 answer
  • Exceptional Electronics began operations September 1, 2019. The firm sells its merchandise for cash and on open account. Sales a
    7·1 answer
  • On the product continuum, a system falls in the area of low volume and low standardization, but it is NOT at the extreme left (l
    9·1 answer
  • You have acquired a new CT scanner at a cost of $750,000. You expect to perform 7,000 procedures per year over the estimated 5-y
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!