Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Omni Enterprises, Ltd. has a number of divisions, including Omni-Press Division, a producer of high-end air compressors, and Omni-Construct Division, a homebuilder. Omni-Press produces the
Omni Enterprises, Ltd. has a number of divisions, including Omni-Press Division, a producer of high-end air compressors, and Omni-Construct Division, a homebuilder. Omni-Press produces the Xtreme 880 air compressor that can be used by Omni-Construct to build residential homes. $1,600 $975 The market price of the Xtreme 880 is The full cost of the unit is 1) a) If Omni's transfer policy require transfer at full cost, what will the transfer price be? b) Do you suppose both divisions will choose to transfer at that price? 2) a) If Omni's transfer policy require transfer at market price, what will the transfer price be? b) Do you suppose both divisions will choose to transfer at that price? 3) a) If Omni allows negotiated transfer pricing and Omni-Press can avoid selling expenses of by selling to Omni-Construct, which division sets the minimum transfer price and what is that amount? $225 b) Which division sets the maximum transfer price and what is that amount? c) Do you think that the two divisions would choose to transfer somewhere in the bargaining range? If so, how will the price be determined
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