Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Blossom Industries is a decentralized firm. It has two production centres: Vancouver and Kamloops. Each one is evaluated based on its return on investment. Vancouver

image text in transcribedimage text in transcribed

Blossom Industries is a decentralized firm. It has two production centres: Vancouver and Kamloops. Each one is evaluated based on its return on investment. Vancouver has the capacity to manufacture 110,000 units of component TR222. Vancouver's variable costs are $151 per unit. Kamloops uses component TR222 in one of its products. Kamloops adds $91 of variable costs to the component and sells the final product for $455. Consider the following independent situations: Vancouver can sell all 110,000 units of TR222 on the open market at a price of $250 per unit. Kamloops is willing to buy 11,000 of those units. What should the transfer price be? Of the 110,000 units of component TR222 it can produce, Vancouver can sell 77,000 units on the open market at a price of $250 per unit. Kamloops is willing to buy an additional 11,000 units. What should the minimum transfer price be? Of the 110,000 units of component TR222 it can produce, Vancouver can sell 88,000 units on the open market at a price of $250 per unit. Kamloops is willing to buy an additional 33,000 units. What should the transfer price be? (Round answer to 2 decimal places, e.g. 52.75.)

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

Step: 3

blur-text-image

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

Managerial Accounting 1

Authors: Ray H. Garrison

1st Edition

1259114457, 978-1259114458

More Books

Students also viewed these Accounting questions

Question

Identify the cause of a performance problem. page 363

Answered: 1 week ago