a 10 Weygandt, Financial & Managerial Accounting, 2e Help I Systerm Announcement

Question

a 10 Weygandt, Financial & Managerial Accounting, 2e Help I Systerm Announcements.(1 Unread) Exercise 22-16 (Part Level Submission) Crede Inc. has two divisions. Division A makes and sells student desks. Division 8 manufectures and sells reading lamps tach desk has a reading lamp as one of its components. Division A can purchase reading lamps at a cost of $ 9.50 from an outside vendor. Division A needs 10,000 lamps for the coming year Division 8 has the capacity to manufacture 49,0 lamps annually. Sales to outside customers are estimated at 39,000 an" er ne et Reading lamps are sold at S 11.50 each. Variable costs are S 6.50 per lamp include S 1.00 of arable sale ests hat n not name rings are sold internally to Division A. The total amount offind costs nor ovnon-·75,000 Consider the following independent situations. (a) What should be the minimum transfer price accepted by pre-ped by 0 t Division for the 10,000 lamps and the maximum transfer (Round answers to 2 decimal places,e.g.10.5o.) Minimum transfer price accepted by Division B s Maximum transfer price paid by Division A per unit SMBLAR EXERCISE AVE FOR LATER Attempts: O of 3 used The parts of ths eston must be completed order. This part w" be available when you complete the part above

Explanation / Answer

a) Minimum transfer price accepted by division B = $6.5 - $1   = $5.5 Answer

b) Maximum transfer price paid by Division A = $9.5 Answer

Explanations: a) Since Division B has additional capacity for 10,000 units, it will charge variable costs less cost saved due to internal transer as the minimum transfer price acceptable.

b) Division B can pay a maximumof the cost it incurred for purchasing the lamp desks from outside market.

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