Answered step by step
Verified Expert Solution
Question
1 Approved Answer
need help asap with the last question only. I will provide all my answers with it. need help with question 3c. asap The Ivy Company
need help asap with the last question only. I will provide all my answers with it.
The Ivy Company manufactures and sells television sets. Its assembly division (AD) buys television screens from the screen division (SD) and assembles the TV sets. The SD, which is operating at capacity, incurs an incremental manufacturing cost of $90 per screen. The SD can sell all its output to the outside market at a price of $125 per screen, after incurring a variable marketing and distribution cost of $6 per screen. If the AD purchases screens from outside suppliers at a price of $125 per screen, it will incur a variable purchasing cost of $3 per screen. Iny's division managers can act autonomously to maximize their own division's operating income. Read the requirements. Requirement 1. What is the minimum transfer price at which the SD manager would be willing to sell screens to the AD? Requirement 3. Now suppose that the SD can sell only 80% of its output capacily of 10.000 screens per month on the open markat. Capacily cannot be reduoed in the short run. The AD can assemble and sell more than 10,000 TV sets per month. a. What is the minimum transfer price at which the SD manager would bo willing to sell screens to the AD ? (Select the group(s) of units and enter the minimun transior price for each sroup.) b. From the point of view of ivg/s management, how much of the SD culput should be transterred to the AD? c. If Ivy mandates the SD and AD managers to "split the difference" on the minimum and maximum transfer prices they would be willing to negotiate over. What would be the resulting transter price? Does this price achieve the outcome desired in requirement 3b ? (Use the minimum transfer price from requirement 1. When calculating this amount. Round your answer to the nearest whole dollar.) If the managers of the AD and the SD would setile on a transfor price of they achieve the desired outcome. The Ivy Company manufactures and sells television sets. Its assembly division (AD) buys television screens from the screen division (SD) and assembles the TV sets. The SD, which is operating at capacity, incurs an incremental manufacturing cost of $90 per screen. The SD can sell all its output to the outside market at a price of $125 per screen, after incurring a variable marketing and distribution cost of $6 per screen. If the AD purchases screens from outside suppliers at a price of $125 per screen, it will incur a variable purchasing cost of $3 per screen. Iny's division managers can act autonomously to maximize their own division's operating income. Read the requirements. Requirement 1. What is the minimum transfer price at which the SD manager would be willing to sell screens to the AD? Requirement 3. Now suppose that the SD can sell only 80% of its output capacily of 10.000 screens per month on the open markat. Capacily cannot be reduoed in the short run. The AD can assemble and sell more than 10,000 TV sets per month. a. What is the minimum transfer price at which the SD manager would bo willing to sell screens to the AD ? (Select the group(s) of units and enter the minimun transior price for each sroup.) b. From the point of view of ivg/s management, how much of the SD culput should be transterred to the AD? c. If Ivy mandates the SD and AD managers to "split the difference" on the minimum and maximum transfer prices they would be willing to negotiate over. What would be the resulting transter price? Does this price achieve the outcome desired in requirement 3b ? (Use the minimum transfer price from requirement 1. When calculating this amount. Round your answer to the nearest whole dollar.) If the managers of the AD and the SD would setile on a transfor price of they achieve the desired outcome need help with question 3c. asap
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started