3. Assume the Small Components Division of Martin Manufacturing produces a video card une electronic products. (Click the icon to view additional information.) Read the requirements Requirement 1. What is the highest acceptable transfer price for the divisions? The highest acceptable transfer price for the divisions is the Small Components Division's (1) direct materials plus variable manufacturing costs Requirement 2. Assuming the transfer price is negotiated between the divisions of the company, what would acceptable transfer price? Assume variable selling expenses pertain to outside sales only. The lowest acceptable transfer price for the divisions is the Small Components Division's (2) The lowest Requirement 3. Which transfer price would the manager of the Small Components Division prefer? Which transfer price would the manager of the Computer Division prefer? The manager of the Small Components Division would prefer a transfer price of The manager of the Computer Division would prefer a transfer price of Requirement 4. If the company's policy requires that all in-house transfers must be priced at full absorption cost plus 5% what transfer price would be used? Assume that the increased production level needed to fill the transfer would result in fixed manufacturing overhead decreasing by $3.00 per unit. (Round your answer to the nearest cent) Begin by selecting the formula to compute the transfer price under this strategy (Abbreviation used: MOH-Manufacturing overhead.) (3) Cost-plus transfer price The transfer price that would be used is Requirement 5. If the company's policy requires that all in-house transfers must be priced at total manufacturing variable cost plus 28%, what transfer price would be used? Assume that the company does not consider foxed manufacturing overhead in setting its internal transfer price in this scenario. (Round your answer to the nearest cent.) = Begin by selecting the formula to compute the transfer price under this strategy. (Abbreviation used: MOH Manufacturing overhead.) (4) Transfer price The transfer price that would be used is Requirement 6. Assume now that the company does incur the variable selling expenses on internal transfers. If the company policy is to set transfer prices at 106% of the sum of the full absorption cost and the variable selling expenses, what transfer price would be set? Assume that the fixed manufacturing overhead would drop by $3.00 per unit as a result of the increased production resulting from the internal transfers. (Round your answer to the nearest cent.) Begin by selecting the formula to compute the transfer price under this strategy. (Abbreviation used: MOH Manufacturing overhead.) (5) Transfer price The transfer price that would be used is 1: More Info The division's manufacturing costs and variable selling expenses related to the video card are as follows Cost per unit Direct materials $ 14.00 Direct labor S 4.00 Variable manufacturing overhead $ 11.00 Fixed manufacturing overhead (at current production level) Variable selling expenses $ 7.00 3.00 The Computer Division of Martin Manufacturing can use the video card produced by the Small Components Division and is interested in purchasing the video card in-house rather than buying it from an outside supplier. The Small Components Division has sufficient excess capacity with which to make the extra video cards. Because of competition, the market price for this video card is $38 regardless of whether the video card is produced by Martin Manufacturing or another company. 2: Requirements 1. What is the highest acceptable transfer price for the divisions? 2. Assuming the transfer price is negotiated between the divisions of the company, what would be the lowest acceptable transfer price? Assume variable selling expenses pertain to outside sales only. 3. Which transfer price would the manager of the Small Components Division prefer? Which transfer price would the manager of the Computer Division prefer? 4. If the company's policy requires that all in-house transfers must be priced at full absorption cost plus 5%, what transfer price would be used? Assume that the increased production level needed to fill the transfer would result in fixed manufacturing overhead decreasing by $3.00 per unit. (Round your answer to the nearest cent.) 5. If the company's policy requires that all in-house transfers must be priced at total manufacturing variable cost plus 28%, what transfer price would be used? Assume that the company does not consider fixed manufacturing overhead in setting its internal transfer price in this scenario. (Round your answer to the nearest cent.) 6. Assume now that the company does incur the variable selling expenses on internal transfers. If the company policy is to set transfer prices at 106% of the sum of the full absorption cost and the variable selling expenses, what transfer price would be set? Assume that the fixed manufacturing overhead would drop by $3.00 per unit as a result of the increased production resulting from the internal transfers. (Round your answer to the nearest cent.) (1) O 0000 conversion costs direct materials plus variable manufacturing costs market price (2) conversion costs direct materials plus variable manufacturing costs market price sale price variable costs sale price variable costs (5) 0000 0000 0000 (4) Market Price x 1.05 Variable Cost Variable Cost x 1.05 Market Price x 1.28 Variable Cost Variable Cost 1.28 000 000 000 (Variable Cost + Fixed MOH Cost) (Variable Cost + Fixed MOH Cost) x 1.05 (Variable Cost + Fixed MOH Cost+ Variable Selling Expense) x 1.05 (Variable Cost + Fixed MOH Cost) (Variable Cost + Fixed MOH Cost) * 1.28 (Variable Cost + Fixed MOH Cost + Variable Selling Expense) x 1.28 O (Variable Cost + Fixed MOH Cost) Market Price x 1.06 O (Variable Cost + Fixed MOH Cost) x 1.06 Variable Cost Variable Cost x 1.06 O (Variable Cost + Fixed MOH Cost + Variable Selling Expenses) x 1.06