Current Attempt in Progress Lovell Computer Parts Inc. is in the process of setting a selling price on a new component it has just designed and developed. The following cost estimates for this new component have been provided by the accounting department for a budgeted volume of 46,000 units. Per Unit Total Direct materials $ 50 Direct labor $ 23 Variable manufacturing overhead $ 25 Fixed manufacturing overhead $ 598,000 Variable selling and administrative expenses $ 18 Fixed selling and administrative expenses $414,000 Lovell Computer Parts management requests that the total cost per unit be used in cost-plus pricing its products. On this particular product, management also directs that the target price be set to provide a 23% return on investment (ROI) on invested assets of $ 1,000,000 (a) Compute the markup percentage and target selling price that will allow Lovell Computer Parts to earn its desired ROI of 23% on this new component. (Round markup percentage to 2 decimal places, e.g. 10.50%.) Markup percentage % Target selling price $ e Textbook and Media Save for Later Attempts: 0 of 3 used Submit Answer Current Attempt in Progress Gutierrez Company makes various electronic products. The company is divided into a number of autonomous divisions that can either sell to internal units or sell externally. All divisions are located in buildings on the same piece of property. The Board Division has offered the Chip Division $25 per unit to supply it with chips for 36,000 boards. It has been purchasing these chips for $26 per unit from outside suppliers. The Chip Division receives $27.60 per unit for sales made to outside customers on this type of chip. The variable cost of chips sold externally by the Chip Division is $16.60. It estimates that it will save $5.60 per chip of selling expenses on units sold internally to the Board Division. The Chip Division has no excess capacity. (a) Calculate the minimum transfer price that the Chip Division should accept. (Round answers to 2 decimal places.e.g. 10.25.) Minimum transfer price $ 22 Should Chip Division accept the offer? Yes (b) Suppose that the Chip Division decides to reject the offer. What are the financial implications for each division, and for the company as a whole, of this decision? Total Lost contribution margin by Board Division $ Total Lost contribution margin by Chip Division $ Overall Lost contribution margin for the company $ e Textbook and Media Assistance Used Save for Later Last saved 15 minutes ago. Attempts: 0 of 3 used Submit Answer View Policies Current Attempt in Progress Comm Devices (CD) is a division of Worldwide Communications, Inc. CD produces restaurant pagers and other personal communication devices. These devices are sold to other Worldwide divisions, as well as to other communication companies. CD was recently approached by the manager of the Personal Communications Division regarding a request to make a special emergency- response pager designed to receive signals from anywhere in the world. The Personal Communications Division has requested that CD produce 11,400 units of this special pager. The following facts are available regarding the Comm Devices Division. Selling price of standard pager $99 Variable cost of standard pager $45 Additional variable cost of special pager $39 For each of the following independent situations, calculate the minimum transfer price, and determine whether the Personal Communications Division should accept or reject the offer. (a) The Personal Communications Division has offered to pay the CD Division $111 per pager. The CD Division has no available capacity. The CD Division would have to forgo sales of 9,120 pagers to existing customers in order to meet the request of the Personal Communications Division. (Note: The number of special pagers to be produced does not equal the number of existing pagers that would be forgone.) (Round answer to 2 decimal places, eg. 125.36.) Minimum transfer price $ Personal Communications Division should the offer. (b) The Personal Communications Division has offered to pay the CD Division $150 per pager. The CD Division has no available capacity. The CD Division would have to forgo sales of 15,200 pagers to existing customers in order to meet the request of the Personal Communications Division. (Note: The number of special pagers to be produced does not equal the number of existing pagers that would be forgone.) Minimum transfer price $ Personal Communications Division should the offer. (c) The Personal Communications Division has offered to pay the CD Division $106 per pager. The CD Division has available capacity. Minimum transfer price $ Personal Communications Division should the offer e Textbook and Media Save for Later Attempts: 0 of 3 used Submit