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Freedom Aeronautics, which sells aircraft, has two profit centers, Systems and Assembly. Systems makes navigation equipment and transfers them to Assembly, which then puts together

Freedom Aeronautics, which sells aircraft, has two profit centers, Systems and Assembly. Systems makes navigation equipment and transfers them to Assembly, which then puts together the aircraft for external sale. Systems can make up to 200 units a year at a variable cost of $1 million each. Assembly has variable costs of $12 million per aircraft. Assembly receives an order for 4 planes at a price of $18 million each. Read the requirements. Requirement 1. Suppose that Systems has no ability to sell its output extemally and has excess capacity. Would the top management of Freedom want the divisions to take the order? (Enter amounts in millions, $XXX) Would top management at Freedom want the divisions to take the order since there are no capacity constraints? How much, in millions, does each aircraft generate as a positive contribution margin? I Requirement 2. What range of transfer prices would induce the managers of Systems and Assembly to take the decision you identified in requirement 1? (Enter amounts in millions, SX.XX) For the Systems division, the manager will not accept any price lower than (Enter amounts in millions, SX.XX) For the Assembly division, the manager will not pay a transfer price higher than million million Therefore, the appropriate range of transfer prices that will induce the managers to take the order is Requirement 3. Now suppose that Systems can sell any navigation systems it makes externally for $2.5 million per unit. The division incurs advertising and distribution costs of $170,000 par system for its extemal sales. Would the top management of Freedom want the divisions to take the order? (Round intermediary and final calculations to three decimal places. Enter the amounts in millions, $XXXXX) Would the top management of Freedom want the divisions to take the order? How much profit, in millions, does a navigation unit sold directly to the external market generate for Freedom? Requirement 4. What range of transfer prices would induce the managers of Systems and Assembly to take the decision you identified in requirement 3? (Round intermediary and final calculations to three decimal places. Enter the amounts in millions, $X.XXX.) For the Systems division, the manager will not accept any price lower than million. (Enter amounts in millions, $X.XX.) For the Assembly division, the manager will not pay a transfer price higher than million. in the presence of an outside market, the feasible range of transfer prices is

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