Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Lamothe Solutions is a management consulting firm. Its Business Division advises firms on the adoption and use of financial systems. Civic Division consults with state

image text in transcribed
image text in transcribed
Lamothe Solutions is a management consulting firm. Its Business Division advises firms on the adoption and use of financial systems. Civic Division consults with state and local governments. Civic Division has a client that is interested in implementing a new costing system in its public works department. The division's head approached the head of Business Division about using one of its associates. Corporate Division charges clients $840 per hour for associate services, the same rate other consulting companies charge. The Civic Division head complained that it could hire its own associate at an estimated variable cost of $440 per hour, which is what Business pays its associates. Suppose that Civic Division will charge the client interested in implementing a costing system by the hour based on cost plus a fixed fee, where the cost is primarily the consultant's hourly pay. Assume also that Civic Division cannot hire additional consultants, That is, if it is to do this job, it will need to use a consultant from Business Division. Required: a-1. What is the minimum transfer price that Business Division should obtain for its services, assuming that it is operating at capacity? a-2. Would this be an ethical price to charge the government client? b-1. What is the transfer price you would recommend if Corporate Division was not operating at capacity? b.2. Would this be an ethical price to charge the government client? Complete this question by entering your answers in the tabs below. What is the minimum transfer price that Business Division should obtain for its services, assuming that it is operating at capacity? Complete this question by entering your answers in the tabs below. What is the transfer price you would recommend if Corporate Division was not operating

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Complete Guide To Spotting Accounting Fraud And Cover-Ups

Authors: Martha Maeda

1st Edition

160138212X, 978-1601382122

More Books

Students also viewed these Accounting questions

Question

Describe what a one-minute self-sell is and what it contains.

Answered: 1 week ago

Question

List and explain the steps in the negotiating process.

Answered: 1 week ago