Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Accent Company has two divisions Glass and Florist. The Glass Division makes glass vases, which have the following unit costs: Variable Cost $2.40 Fixed overhead

Accent Company has two divisions Glass and Florist. The Glass Division makes glass vases, which have the following unit costs: Variable Cost $2.40 Fixed overhead 1.30 The Florist Division of the company sells cut flowers and uses glass vases. The Florist Division uses 10,000 glass vases annually and currently buys them from an outside supplier for $3.50 each. The Glass Division produces 100,000 glass vases per year and sells them all on the external market for $4.00 each. Vases sold outside incur a sales commission of $0.30 per Vase; this commission would not be paid on internal transfers. Required: A. What is the current Transfer Price if the Glass division like to sell 10,000 units to The Florist Division? Explain. B. Both managers met and agreed on a transfer price of $3.25 per vase. Is this a good idea for each division? Explain. C. Due to the economic condition The Glass division can only sell 85,000 units to the regular market, should the transfer take place, and if so, what is the transfer price, explain. Explain with proper and required calculations. Show all formulas used

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Marketing Theory And Practice

Authors: Michael J. Baker

1st Edition

1349068555, 9781349068531

More Books

Students also viewed these Accounting questions

Question

Transform a raw score into standard (Z) score and vice versa

Answered: 1 week ago