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Anstell Corporation operates a Manufacturing Division and a Marketing Division. Both divisions are evaluated as profit centers. Marketing buys products from Manufacturing and packages them
Anstell Corporation operates a Manufacturing Division and a Marketing Division. Both divisions are evaluated as profit centers. Marketing buys products from Manufacturing and packages them for sale. Manufacturing sells many components to third parties in addition to Marketing. Selected data from the two operations follow: * For Manufacturing, this is the price to third parties. t For Marketing, this does not include the transfer price paid to Manufacturing. Required: a. Current output in Manufocturing is 164,000 units. Marketing requests an additional 39,000 units to produce a special order. What transfer price would you recommend? b. Suppose Manufacturing is operating, at full capacity. What transfer price would you recommend? Eastlawn Travel has two operating divisions, Tours and Resorts. The two divisions meet the requirements for segment disclosures. Before transactions between the two divisions are considered, revenues and costs are as follows: The two divisions have an arrangement by which Resorts gives coupons redeemable for tours and Tours gives discount coupons goo for stays at a resort. The value of the coupons for the tours redeemed during the past year totaled $5.8million. The discount coupons redeemed at the resorts totaled $2.7 million. As of the end of the year, all coupons for the current year expired. Required: What are the operating profits for each division considering the effects of the costs arising from the joint agreement? Note: Enter your answers in thousands
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