LG Electronics Ltd operates as a decentralised multidivisional company. The Electronic Division of LG Electronics Ltd manufactures smart televisions, each of which requires one square metre of special integrated circuit boards.The Electronic division can purchase this material from an external supplier at $100 plus a $5 inspection cost per square metre.Alternatively, it could purchase this material internally from the Assembly Division of LG Electronics Ltd.<\/p>
The Assembly Division's incremental (variable) cost for manufacturing one square metre of special integrated circuit boards needed per television is $80. The Assembly Division is currently operating at 60% of its capacity of 20,000 square metres per month. It currently sells one square metre of special integrated circuit boards to external customers at $90 per square metre.<\/p>
The Electronic Division will initially manufacture 7,500 smart television units per month.<\/p>
<\/p>
REQUIRED:<\/p>
A)<\/strong>What is the minimum price at which the Assembly Division of LG Electronics Ltd would be willing to sell one square metre of special integrated circuit boards to the Electronic Division of LG Electronics Ltd? (show calculations)<\/p> B)<\/strong>Suppose that the Electronic division's manufacturing plans increase to 12,500 units per month. Would this alter the minimum price at which the Assembly Division would be willing to sell each square metre of special integrated circuit boards to the Electronic Division? (show calculations)<\/p> C)<\/strong>What is the maximum price that the Electronic Division would be willing to pay to the Assembly Division for one square metre of special integrated circuit boards? (show calculations)<\/p> D)<\/strong>Now assume that a new external supplier offers to sell the special integrated circuit boards to the Electronic Division at a price of $78 (plus there will still be an inspection cost of $5). From the point of view of LG Electronics Ltd as a whole, how much of the 12,500 units required by the Electronic Division should be transferred by the Assembly Division?Which transfer pricing policy will guarantee this outcome? Briefly explain.<\/p>",
"transcribed_text": "",
"related_book": {
"title": "Cost Management Measuring Monitoring And Motivating Performance",
"isbn": "1118168879, 9781118168875",
"edition": "2nd Canadian Edition",
"authors": "Leslie G. Eldenburg, Susan Wolcott, Liang Hsuan Chen, Gail Cook",
"cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/635f99b5717e0_1157.jpg",
"uri": "\/textbooks\/cost-management-measuring-monitoring-and-motivating-performance-2nd-canadian-edition-1157",
"see_more_uri": ""
},
"free_related_book": {
"isbn": "0080253830",
"uri": "\/textbooks\/advances-in-biotechnology-scientific-and-engineering-principles-volume-i-1st-edition-9780080253831-9781483148458",
"name": "Advances In Biotechnology Scientific And Engineering Principles Volume I",
"edition": "1st Edition"
},
"question_posted": "2024-06-29 01:31:48",
"see_more_questions_link": "\/study-help\/questions\/business-banking-2021-September-12",
"step_by_step_answer": "The Answer is in the image, click to view ...",
"students_also_viewed": [
{
"url": "\/the-l-shaped-arm-bcd-rotates-about-the-z-axis",
"description": "The L-shaped arm BCD rotates about the z axis with a constant angular velocity 1 of 5rad\/s, knowing that the 7.5-in.-radius disk rotates about BC with a constant angular velocity 2 of 4 rad\/s,...",
"stars": 3
},
{
"url": "\/study-help\/business-statistics-in-practice\/the-outlier-once-again-is-john-carter-whose-budget-was-1981587",
"description": "=+The outlier, once again, is John Carter, whose budget was more than $200M more than its gross revenue in the U.S. Setting this movie aside and rerunning the regression from Exercise 8, we find:",
"stars": 3
},
{
"url": "\/kendra-wecker-is-the-controller-for-wildcat-company-which-has",
"description": "Kendra Wecker is the controller for Wildcat Company, which has numerous long-term investments in debt securities. Wildcats investments are mainly in 10-year bonds. Wecker is preparing its year-end...",
"stars": 3.5
},
{
"url": "\/study-help\/questions\/superior-company-provided-the-following-data-for-the-year-ended-9853695",
"description": "Superior Company provided the following data for the year ended December 31 (all raw materials are used in production as direct materials): Selling expenses Purchases of raw materials Direct labor...",
"stars": 3.5
},
{
"url": "\/study-help\/questions\/select-all-that-apply-which-statements-are-true-regarding-organized-4744242",
"description": "Select all that apply Which statements are true regarding organized labor during World War II? Multiple select question. They agreed to freeze union membership and wages until the war was over. They...",
"stars": 3.5
},
{
"url": "\/study-help\/questions\/a-ba-is-documenting-their-analysis-and-design-experience-which-1179672",
"description": "A BA is documenting their analysis and design experience. Which task covers the question, \"What was expected to be delivered?\"",
"stars": 3.5
},
{
"url": "\/study-help\/questions\/27-question-27-its-the-start-of-a-new-quarter-5065517",
"description": "27. Question 27 It's the start of a new quarter at Adventure Works. You find yourself in a modern conference room surrounded by department heads and key stakeholders. The focal point of the room is...",
"stars": 3.5
},
{
"url": "\/study-help\/questions\/ratino-is-working-on-how-to-process-criticism-at-work-3365259",
"description": "Ratino is working on how to process criticism at work so he can influence the conversation to a solution. What is the last step in this process? Select an answer: He should assume positive intent. He...",
"stars": 3.5
},
{
"url": "\/study-help\/questions\/brad-gokool-is-reviewing-the-results-of-the-subsequent-events-5451030",
"description": "Brad Gokool is reviewing the results of the subsequent events audit procedures. Brad is writing a report for his audit partner based on these results and will be attending a meeting tomorrow with the...",
"stars": 3.5
},
{
"url": "\/study-help\/questions\/which-techniques-are-recommended-when-communicating-datainformed-decisions-select-all-3216172",
"description": "Which techniques are recommended when communicating data-informed decisions? Select all that apply. a. Defining the problem. b. Assigning blame for the problem. c. Supporting the solution with data....",
"stars": 3.5
}
],
"next_back_navigation": {
"previous": "\/study-help\/questions\/fulton-and-sons-inc-presently-leases-a-copy-machine-under-4440003",
"next": "\/study-help\/questions\/the-following-transactions-occurred-for-notes-record-in-general-journal-4440005"
},
"breadcrumbs": [
{
"name": "Study help",
"link": "https:\/\/www.solutioninn.com\/study-help\/questions-and-answers"
},
{
"name": "Business",
"link": "https:\/\/www.solutioninn.com\/study-help\/questions-and-answers\/business"
},
{
"name": "Accounting",
"link": "https:\/\/www.solutioninn.com\/study-help\/questions\/business-accounting"
},
{
"name": "LG Electronics Ltd operates as a decentralised multidivisional company. The Electronic Division",
"link": "https:\/\/www.solutioninn.com\/study-help\/questions\/lg-electronics-ltd-operates-as-a-decentralised-multidivisional-company-the-4440004"
}
],
"skill_details": {
"skill_id": "9",
"skill_name": "Accounting",
"parent_id": "1"
}
}"
}
}