EXERCISE 2: ADAPTED 2016 EXAM The plastics Company manufactures plastic buckets. The bucket unit moulds the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
EXERCISE 2: ADAPTED 2016 EXAM The plastics Company manufactures plastic buckets. The bucket unit moulds the plastic buckets, which are transferred to the handles unit, where a plastic handle is fitted to each bucket. The bucket unit's variable cost is $12 per bucket, while the handles unit's variable cost is a further $5 per bucket. There is no intermediate market for moulded buckets without handles. The handles unit sells the completed product on an imperfect market. The selling price of the final product is as follows: Selling price of final Quantity sold per product month (units) $20 $18 $15 20 000 40 000 60 000 REQUIRED (a) What are the merits and demerits of negotiation between unit managers as a means of arriving at a transfer price? Marks 5 (b) Suggest an appropriate range of transfer prices for the transfer of buckets from the bucket unit to the handles unit. 20 TOTAL MARKS 25 EXERCISE 2: ADAPTED 2016 EXAM The plastics Company manufactures plastic buckets. The bucket unit moulds the plastic buckets, which are transferred to the handles unit, where a plastic handle is fitted to each bucket. The bucket unit's variable cost is $12 per bucket, while the handles unit's variable cost is a further $5 per bucket. There is no intermediate market for moulded buckets without handles. The handles unit sells the completed product on an imperfect market. The selling price of the final product is as follows: Selling price of final Quantity sold per product month (units) $20 $18 $15 20 000 40 000 60 000 REQUIRED (a) What are the merits and demerits of negotiation between unit managers as a means of arriving at a transfer price? Marks 5 (b) Suggest an appropriate range of transfer prices for the transfer of buckets from the bucket unit to the handles unit. 20 TOTAL MARKS 25
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
Two stationary point charges +3.00 nC and +2.00 nC are separated by a distance of 50.0 cm. An electron is released from rest at a point midway between the two charges and moves along the line...
-
The automotive industry is constantly adding new and different products and technologies to their carsabove as well as under the hood. Conduct an Internet or library database search and discuss two...
-
John Smith worked in the stockyard of a large building supply company. One day he unexpectedly left for California, never to return. His foreman seized the opportunity to continue to submit time...
-
The city of Clement levies a 5 percent tax on the base price of rooms provided by hotels and motels located within the city limits . This year, the aggregate room price subject to tax was $ 1 7...
-
Ophelia has income of M1 = 100 in period 1 and M2 = 20 in period 2. If she chooses to, she can either save or borrow at an interest rate of i = 0.05 (so an interest rate of 5% per period). The rate...
-
Task 2 In addition to the report produced for Task 1, the SMT have asked that you produce a short presentation, (minimum of 2 slides per bullet point), to help ensure that employees handle, store and...
-
Real solutions for x 2 = 5 ( x + 3 6 0 ) ?
-
1) Two-stage compressor with irreversibilities = You need to build a two-stage compression system with intercooling to increase the pressure of Argon (monatomic gas, constant specific heat) from pi...
-
A tightrope is connected at each end to a vertical tree trunk at a height of 1.57 meter above the ground. The two trees are located a distance 5.00 meters apart. At the midpoint of the tightrope, a...
-
A missing order occurs when a maximum of the two-slit diffraction pattern lines up with the minimum of the single slit diffraction pattern. Adjust the parameters of the simulation to create a...
-
If TC = Q/2 * H + D/Q * S + P * D where P is the purchase price, then the derivative of TC with respect to Q is: Group of answer choices H/2 + DS/Q + P * D H/2 + DS/Q^2 + P Q/2 + DS/Q - P*D H/2 -...
-
Indicate in which financial statement cach item would most likely appear: income statement (I), balance sheet (B), statement of owner's equity (E), or statement of cash flows (CF). a. Assets d....
-
In a recent years financial statements, Home Depot reported the following results. Compute and interpret Home Depots return on assets (assume competitors average a
-
0 Define and explain return on assets.
Study smarter with the SolutionInn App