What would be the minimum transfer price per unit that Division A would be willing to accept?
Division A produces a product that it sells to the outside market. It has compiled the following:
| Variable manufacturing cost per unit | $9 |
| Variable selling costs per unit | $3 |
| Total fixed manufacturing costs | $153000 |
| Total fixed selling costs | $30000 |
| Per unit selling price to outside buyers | $40 |
| Capacity in units per year | 30000 |
Division B of the same company is currently buying an identical product from an outside provider for $38 per unit. It wishes to purchase 4700 units per year from Division A. Division A is currently selling 25300 units of the product per year. If the internal transfer is made, Division A will not incur any selling costs. What would be the minimum transfer price per unit that Division A would be willing to accept?
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What would be the minimum transfer price per unit that Division A would be willing to accept?
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The machining division of ITA International has a capacity of 2,010 units. Its sales and cost...
The machining division of ITA International has a capacity of
2,010 units. Its sales and cost data are:
Selling price per unit
$
80
Variable manufacturing costs per
unit
30
Variable selling costs per
unit
3
Total fixed manufacturing
overhead
216,600
The machining division is currently selling 1,810 units to outside
customers, and the assembly division of ITA International wants to
purchase 400 units from machining. If the transaction takes place,
the variable selling costs per unit on the units...
Capacity in units Selling price to outside customers on the intermediate market Variable costs per unit...
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APPLY THE CONCEPTS: Determining benefits of negotiated transfer price Assume that Selling Division and Buying Division are both owned by Overall Corporation. Selling Division sells a product that is used by Buying Division and outside customers. Selling Division has 22,000 units of excess capacity. Selling Division currently sells the product for $80 per unit and Buying Division currently buys 22,000 units of the product from an outside source for $80 per unit. Variable costs of the product are $16, of...
The machining division of ITA International has a capacity of
2,010 units. Its sales and cost data are:
Selling price per unit
$
80
Variable manufacturing costs per
unit
30
Variable selling costs per
unit
3
Total fixed manufacturing
overhead
216,600
The machining division is currently selling 1,810 units to outside
customers, and the assembly division of ITA International wants to
purchase 400 units from machining. If the transaction takes place,
the variable selling costs per unit on the units...
Capacity in units Selling price to outside customers on the intermediate market Variable costs per unit Fixed costs per unit (based on capacity) 270,000 $20 $ 12 $ 9 The company has a Pump Division that could use this valve in the manufacture of one of its pumps. The Pump Division is currently purchasing 15,000 valves per year from an overseas supplier at a cost of $19 per valve 1. Assume that the Valve Division has ample idle capacity to...
The Machining Division has a capacity of 2.000 . Its sales and cost data are: Selling price per unit Variable manufacturing costs per un Variable administrative costs per un Total fixed manufacturing overhead Total twed administrative costs $20,000 $5,000 The Machining Division is currently selling 1,000 units to outside customers, and the Assembly Division wants to purchase 300 units from Machining per unit on the units transferred to Assembly will be $2/unit, not $5 . What should be the transfer...
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. The machung von has a capacity of 20,700 units and selling price per un h as variable manufacturing costs per unit of $14, variable selling costs of $7 g overhead of 78.000 current produces and sell 19.300 units to outside customers. The web de w e to buy 50 units from machining. If the t hers to the assembly division, two incur any are ng costs. The assembly vision is currently buying these units from an de company at...
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