Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Please help. Thank you 14. Division S produces a component that is used by Division B. Division S's cost of manufacturing the component is: Direct
Please help. Thank you
14. Division S produces a component that is used by Division B. Division S's cost of manufacturing the component is: Direct materials $30; Direct labor $8; Variable overhead $10; Fixed overhead $12 (based on a practical volume of 250,000 components). Division S also incurs these costs: fixed selling \& administrative $1,200,000, and variable selling $4/ unit. Division S expects to sell only 200,000 components next year. The variable selling expenses are avoidable if the component is sold internally. Division B has been buying the same component from an external supplier for $80 each. It expects to use 40,000 units of the component next year. The manager of Division B has offered to buy 40,000 units from Division S for $56 each. The maximum transfer price should be: a. $80 c. $48 b. $60 d. $38 15. Refer to the data in question 14 . The minimum transfer price should be: a. $60 c. $48 b. $50 d. $30 16. Refer to question 14. How should a transfer price be determined to achieve goal congruence? a. Use market price because the selling c. Negotiate a transfer price between the division is operating at full capacity minimum and maximum transfer price b. Use market price because the selling d. There is no transfer price possible in this division is operating with excess capacity case since X Co. would be better off buying the product from an outside supplierStep 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