Question
PLEASE HELP WITH THESE 2 QUESTIONS! I have to show my work and I have no clue what I am doing! 1. Green Yard Company,
PLEASE HELP WITH THESE 2 QUESTIONS! I have to show my work and I have no clue what I am doing!
1. Green Yard Company, a division of Lawn Supplies, Inc., produces lawn mowers. Green Yard sells lawn mowers to home improvement stores, as well as to Lawn Supplies, Inc. The following information is available for Green Yard's mowers: Fixed cost per unit: $180. Variable cost per unit: $120. Selling price per unit: $450. Lawn Supplies, Inc. can purchase comparable lawn mowers from an outside supplier for $400. In order to ensure a reliable supply, the management of Lawn Supplies, Inc. ordered Green Yard to provide 100,000 lawn mowers per year at a transfer price of $400 per unit. Calculate the minimum transfer price and indicate whether the internal transfer should occur for each of the following: 1. Green Yard is operating at full capacity and would have to give up some current sales to outside buyers if the transfer occurs. 2. Green Yard is not operating at full capacity and could provide the units to Lawn Supplies. MUST SHOW WORK
2. Trout Company is considering introducing a new line of pagers targeting the preteen population. Trout believes that if the pagers can be priced competitively at $45, approximately 500,000 units can be sold. The controller has determined that an investment in new equipment totaling $4,000,000 will be required. Trout requires a minimum rate of return of 14% on all investments.
Instructions: Compute the target cost per unit of the pager. Show your calculations to receive credit for your answer.
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