Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Check my work 4 Division Y has asked Division X of the same company to supply it with 6,600 units of part 1763 this year

image text in transcribed
Check my work 4 Division Y has asked Division X of the same company to supply it with 6,600 units of part 1763 this year to use in one of its products Division Y has received a bid from an outside supplier for the parts at a price of $41 per unit. Division X has the capacity to produce 26,400 units of part 1763 per year. Division X expects to sell 23,760 units of part L763 to outside customers this year at a price of $43.60 per unit. To fill the order from Division Y, Division X would have to cut back its sales to outside customers. Division X produces part 1763 at a variable cost of $33 per unit . The cost of packing and shipping the parts for outside customers is $2 per unit. These packing and shipping costs would not have to be incurred on sales of the parts to Division Y. Required: a. What is the range of transfer prices within which both the Divisions' profits would increase as a result of agreeing to the transfer of 6,600 parts this year from Division X to Division Y? (Round your final answers to 2 decimal places.) Roope of triander prices Transfer price b. Is it in the best interests of the overall company for this transfer to take place? Yes No

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

Students also viewed these Accounting questions