Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Collyer Products Inc. has a Valve Division that manufactures and sells a standard valve as follows: Check my work 00 5411 Capacity in units Selling

image text in transcribed
image text in transcribed
Collyer Products Inc. has a Valve Division that manufactures and sells a standard valve as follows: Check my work 00 5411 Capacity in units Selling price to outside customers on the internediate market Variable costs per unit Fixed costs per unit (based on capacity) 230,000 $ 16 $ 10 $ 7 Print The company has a Pump Division that could use this valve in the manufacture of one of its pumps. The Pump Division is currently purchasing 20,000 valves per year from an overseas supplier at a cost of $15 per valve. 1. Assume that the Valve Division has ample idle capacity to handle all of the Pump Division's needs. What is the acceptable range, any, for the transfer price between the two divisions? S 108 Transfer price $ 15 2. Assume that the Valve Division is selling all that it can produce to outside customers on the intermediate market. What is the acceptable range, if any, for the transfer price between the two divisions? Transfer price 3. Assume again that the Valve Division is selling all that it can produce to outside customers on the intermediate market. Also assume that $3 in variable expenses can be avoided on transfers within the company, due to reduced selling costs. What is the acceptable range, if any, for the transfer price between the two divisions? Transfer price 4. Assume the Pump Division needs 25,000 special high-pressure valves per year. The Valve Division's variable costs to manufacture and ship the special valve would be $11 per unit. To produce these special valves, the Valve Division would have to reduce its production and sales of regular valves from 230,000 units per year to 180,000 units per year. As far as the Valve Division is concerned, what is the lowest acceptable transfer price? (Round your answer to 2 decimal places.) Transfer price

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

Farmers Irs Audit Techniques Guide

Authors: Internal Revenue Service

1st Edition

1304134237, 978-1304134233

More Books

Students also viewed these Accounting questions

Question

Explain in detail how the Mughal Empire was established in India

Answered: 1 week ago

Question

Problem: Evaluate the integral: I - -[ze dx

Answered: 1 week ago