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I am having trouble with questions 1, 2, 4, and 5a and b. For some reason, the solution in the Accounting Book 26th edition by
I am having trouble with questions 1, 2, 4, and 5a and b. For some reason, the solution in the Accounting Book 26th edition by Warren/Reeve/Duchac is not showing a solution and I have paid for the solution subscription already.
OBJ, 5 PR 24-6B Transfer pricing Exoplex Industries Inc. is a diversified aerospace company, including two operating d sions, Sem statements, which into variable and fixed components, are as follows niconductors and Navigational Systems divisions. Condensed divisional income involve no intracompany transfers and include a breakdown of expenses Exoplex Industries Inc. Divisional Income Statements For the Year Ended December 31, 2016 Navigational Semiconductors Systems Division Total Division Sales $ 887,040 $2,168,250 2,168,250 5887040 $2,168,250$3,055,290 $887,040 2,240 units@$396 per unit 3,675 units@ $590 per unit Expenses: Variable: s 519,680 1,734,600 1,734,600 545,000 $519,680 2,240 units @ $232 per unit 3,675 units@ $472* per unit 220,000 $739,680$2,059,600 $2,799,280 $147,360 108,650 5 256,010 Fixed 325,000 Total expenses Income from operations $432 of the $472 per unit represents materials costs, and the remaining $40 per unit represents other variable conversion expenses incurred within the Navigational Systems Division. The Semiconductors Division is presently producing 2,240 units out of a total ca- pacity of 2,820 units. Materials used in producing the Navig roduct are currently purchased from outside suppliers at a price of $432 per unit. The ormance Evaluation for Decentralized Operations Semiconductors Division is able to produce the components used by the Navigational Systems Division. Except for the possible transfer of materials between divisions, no changes are expected in sales and expenses. Instructions 1Would the market price of $432 per unit be an appropriate transfer price for Exoplex Industries Inc.? Explain. 2. If the Navigational Systems Division purchases 580 units from the Semicon- ductors Division, rather than externally, at a negotiated transfer price of $310 per unit, how much would the income from operations of each division and total com 3. Prepare condensed divisional income statements for Exoplex Industries Inc. based on 4If a transfer price of $340 per unit is negotiated, how much would the income 5. aWhat is the range of possible negotiated transfer prices that would be income from operations increase? the data in part (2). from operations of each division and total company income from operations increase acceptable for Exoplex Industries Inc.? b. Assuming that the managers of the two divisions cannot agree on a transfer price, what price would you suggest as the transfer price? PIC.COLLAGEStep by Step Solution
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