Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Crede Inc. has two divisions. Division A makes and sells student desks. Division B manufactures and sells reading lamps Each desk has a reading lamp
Crede Inc. has two divisions. Division A makes and sells student desks. Division B manufactures and sells reading lamps Each desk has a reading lamp as one of its components. Division A can purchase reading lamps at a cost of $ 10.19 from an outside vendor. Division A needs 11,600 lamps for the coming year. Division B has the capacity to manufacture 50,700 lamps annually. Sales to outside customers are estimated at 39,100 lamps for the next year. Reading lamps are sold at $ 12.44 each. Variable costs are $ 7.22 per lamp and include 1.17 of variable sales costs that are not incurred if lamps are sold internally to Division A. The total amount of fixed costs for Division B is $ 78,900 Consider the following independent situations. What should be the minimum transfer price accepted by Division B for the 11,600 lamps and the maximum transfer price paid by Division A? (Round answers to 2 decimal places, e.g. 10.50.) Minimum transfer price accepted by Division B per unit Maximum transfer price paid by Division A per unit Suppose Division B could use the excess capacity to produce and sell externally 21,000 units of a new product at a price of $ 8.40 per unit. The variable cost for this new product is $5.64 per unit. What should be the minimum transfer price accepted by Division B for the 11,600 lamps and the maximum transfer price paid by Division A? (Round answers to 2 decimal places, e.g. 10.50.) Minimum transfer price accepted by Division B per unit Maximum transfer price paid by Division A per unit If Division A needs 15,400 lamps instead of 11,600 during the next year, what should be the minimum transfer price accepted by Division B and the maximum transfer price paid by Division A? (Round answers to 2 decimal places, e.g. 10.50.,) Minimum transfer price accepted by Division B g per unit Maximum transfer price paid by Division A per unit
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started