Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Computech Company operates as a decentralized multidivisional electronics company. Its laptop division buys most of its monitors from the screen division. The screen divisions incremental

Computech Company operates as a decentralized multidivisional electronics company. Its laptop division buys most of its monitors from the screen division. The screen divisions incremental costs for manufacturing the moni- tors are $280 per unit. The screen division is currently working at 85% of capacity. The monitors current market price is $310 per unit. See attached screenshot

image text in transcribed

P9-48A Computech Company operates as a decentralized multidivisional electronics company. Its laptop division buys most of its monitors from the screen division. The screen division's incremental costs for manufacturing the moni tors are $280 per unit. The screen division is currently working at 85% of capacity. The monitor's current market price is $310 per unit Instructions (a) Using the general approach to transfer pricing, determine the minimum transfer price for the screen division (b) Computech Company's transfer price rules state that whenever divisions with unused capacity sell products internally (a) $280 they must transfer the products at incremental costs. Discuss how this transfer-price policy will affect goal congruence, division performance, and autonomy (c) The screen and laptop divisions have negotiated a transfer price between $280 and $310 per monitor. Discuss the im pact of this transfer price on each division in terms of goal congruence, division performance, and division autonomy

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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