Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please answer the attached question and show how you got to your answer. Exercise 8-15 The Appraisal Department of Jean Bank performs appraisals of business

Please answer the attached question and show how you got to your answer.

image text in transcribed

Exercise 8-15 The Appraisal Department of Jean Bank performs appraisals of business properties for loans being considered by the bank and appraisals for home buyers that are financing their purchase through some other financial institution. The department charges $163 per home appraisal, and its variable costs are $135 per appraisal. Recently, Jean Bank has opened its own Home-Loan Department and wants the Appraisal Department to perform 1,360 appraisals on all Jean Bank financed home loans. Bank management feels that the cost of these appraisals to the Home-Loan Department should be $147. The variable cost per appraisal to the Home-Loan Department would be $7 less than those performed for outside customers due to savings in administrative costs. (a) Determine the minimum transfer price, assuming the Appraisal Department has excess capacity. Minimum transfer price (b) Determine the minimum transfer price, assuming the Appraisal Department has no excess capacity. Minimum transfer price (c) Assuming the Appraisal Department has no excess capacity, should management force the department to charge the Home-Loan Department only $147?

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

Fundamentals Of Accounting

Authors: Claudia Gilbertson

10th Edition

1111581169, 978-1111581169

More Books

Students also viewed these Accounting questions

Question

4. What means will you use to achieve these values?

Answered: 1 week ago

Question

3. What values would you say are your core values?

Answered: 1 week ago