Required information Exercise 11A-3 Transfer Pricing Situations (LO11-5) The sow

Question

Required information Exercise 11A-3 Transfer Pricing Situations (LO11-5) The sowowing nformation appies to the questions displayed below, In each of the cases below, assume Dvisionx has a product that can be sold elther to outside customers or to Drvision Y of the same company for use in its production process. The managers of the divisions are evaluated based on their dvisional profts Case Division Xi 106,000 102,000 Capacity in units Number of units being sold to outside custoners Selling price per unit to outside 106,000 79,000 52 $ 23 Variable costs per unit Fixed costs per unit (based on capacity) Division Y: Number of units needed for production Purchase price per unit now being 23,000 23,000 paid to an outside supplier 45 $ 36 Exercise 11A-3 Part 2 2. Refer to the data in case B above. In this case, there will be no savings in variable selling costs on intracompany sales. a. What is the lowest acceptable transfer price from the perspective of the selling dvision? D. What is the highest acceptable transfer price from the perspective of the buying division? c. What is the range of acceptable transfer prices If any) between the two divisions? If the managers are free to negotiate and make decisions on their own, will a transfer probably take place? Complete this question by entering your answers in the tabs below Req 2A Req 2B Req 2c What is the lowest acceptable transfer price from the perspective of the selling division? Req 2A Req 2B>

Explanation / Answer

2a Lowest acceptable transfer price = Variable costs per unit = $18 b Highest acceptable transfer price=$36 c There is a ranger of transfer price $17

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.