Minimum transfer would be accept by Glassware Division = Variable Cost = $ 1.25
Maximum transfer would be willing to pay by Bottle water Division =Outside Market price = $ 2.95
Yes Internal trasfer should be take place from Glassware to Bottle water division as there is a idle capacity of 110000 units.
If Company purchase from outside then cost would be = no of units * Market price = 100000* 2.95 = $ 2950000
If Company procures from internal division the cost would be = no of units * variable cost = 100000* 1.25 = $125000
Net Benefit to the firm = 295000- 125000 = $170000
Note : Fixed cost wouldn't be consider if firm make additional 100000 units because Fixed cost would be same if firm make either 390000 units or upto 500000 units
2. No, Justin would not be agree because at the idle capacity cost of production to the glassware division will only be $ 1.25 i.e. variable cost. as fixed cost will remain same upto 500000 units
Yes, we would be interested because cost of production to the glassware division will only be $ 1.25 i.e. variable cost.
3. Manufacturing cost = variable cost + fixed cost per unit
= 1.25 + 0.70 = $1.95
Transfer Pricing, Idle Capacity Mouton & Perrier, Inc., has a number of divisions that produce liquors,...
Transfer Pricing, Idle Capacity Mouton & Perrier, Inc., has a number of divisions that produce liquors, bottled water, and glassware. The Glassware Division manufactures a variety of bottles that can be sold externally (to soft-drink and juice bottlers) or internally to Mouton & Perrier’s Bottled Water Division. Sales and cost data on a case of 24 basic 12-ounce bottles are as follows: Unit selling price $2.95 Unit variable cost $1.20 Unit product fixed cost* $0.75 Practical capacity in cases 570,000...
Transfer Pricing, Idle Capacity Mouton & Perrier, Inc., has a number of divisions that produce liquors, bottled water, and glassware. The Glassware Division manufactures a variety of bottles that can be sold externally (to soft-drink and juice bottlers) or internally to Mouton & Perrier's Bottled Water Division. Sales and cost data on a case of 24 basic 12-ounce bottles are as follows: Unit selling price $3.05 Unit variable cost $1.10 Unit product fixed cost* $0.65 Practical capacity in cases 570,000...
Transfer Pricing, Idle Capacity Mouton & Perrier, Inc., has a number of divisions that produce liquors, bottled water, and glassware. The Glassware Division manufactures a variety of bottles that can be sold externally (to soft-drink and juice bottlers) or internally to Mouton & Perrier’s Bottled Water Division. Sales and cost data on a case of 24 basic 12-ounce bottles are as follows: Unit selling price $3.05 Unit variable cost $1.30 Unit product fixed cost* $0.65 Practical capacity in cases 540,000...
Transfer Pricing, Idle Capacity Mouton & Perrier, Inc., has a number of divisions that produce liquors, bottled water, and glassware. The Glassware Division manufactures a variety of bottles that can be sold externally (to soft-drink and juice bottlers) or internally to Mouton & Perrier’s Bottled Water Division. Sales and cost data on a case of 24 basic 12-ounce bottles are as follows: Unit selling price $3.25 Unit variable cost $1.35 Unit product fixed cost* $0.65 Practical capacity in cases 550,000...
Transfer Pricing, Idle Capacity Mouton & Perrier, Inc., has a number of divisions that produce liquors, bottled water, and glassware. The Glassware Division manufactures a variety of bottles that can be sold externally (to soft-drink and juice bottlers) or internally to Mouton & Perrier’s Bottled Water Division. Sales and cost data on a case of 24 basic 12-ounce bottles are as follows: Unit selling price $3.15 Unit variable cost $1.15 Unit product fixed cost* $0.70 Practical capacity in cases 500,000...
Chapter 10 Homework Transfer Pricing, Idle Capacity Mouton & Perrier, Inc., has a number of divisions that produce liquors, bottled water, and glassware. The Glassware Division manufactures a variety of bottles that can be sold externally (to soft-drink and juice bottlers) or internally to Mouton & Perrier's Bottled Water Division. Sales and cost data on a case of 24 basic 12-ounce bottles are as follows: $2.95 Unit selling price Unit variable cost Unit product fixed cost* Practical capacity in cases...
Transfer Pricing, Idle Capacity Mouton & Perrier, Inc., has a number of divisions that produce liquors, bottled water, and glassware. The Glassware Division manufactures a variety of bottles that can be sold externally (to soft-drink and juice bottlers) or internally to Mouton & Perrier's Bottled Water Division. Sales and cost data on a case of 24 basic 12-ounce bottles are as follows: Unit selling price $3.05 Unit variable cost $1.30 Unit product fixed cost $0.70 Practical capacity in cases 570,000...
Transfer Pricing with Idle Capacity Oriole, Inc., owns a number of food service companies. Two divisions are the Coffee Division and the Donut Shop Division. The Coffee Division purchases and roasts coffee beans for sale to supermarkets and specialty shops. The Donut Shop Division operates a chain of donut shops where the donuts are made on the premises. Coffee is an important item for sale along with the donuts and, to date, has been purchased from the Coffee Division. Company...
Determining Market-Based and Negotiated Transfer Prices Carreker, Inc., has a number of divisions, including the Alamosa Division, producer of surgical blades, and the Tavaris Division, a manufacturer of medical instruments. Alamosa Division produces a 2.6 cm steel blade that can be used by Tavaris Division in the production of scalpels. The market price of the blade is $21. Cost information for the blade is: Variable product cost $ 9.30 Fixed cost 5.30 Total product cost $14.60 Tavaris needs 18,000 units...
Determining Market-Based and Negotiated Transfer Prices Carreker, Inc., has a number of divisions, including the Alamosa Division, producer of surgical blades, and the Tavaris Division, a manufacturer of medical instruments. Alamosa Division produces a 2.6 cm steel blade that can be used by Tavaris Division in the production of scalpels. The market price of the blade is $25. Cost information for the blade is: Variable product cost $ 9.70 Fixed cost 5.30 Total product cost $15.00 Tavaris needs 18,000 units...