Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

PLEASE PLEASE put answers in same box format for organization purposes. last answer got me nowhere Alpha and Beta are divisions within the same company.

PLEASE PLEASE put answers in same box format for organization purposes. last answer got me nowhere
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Alpha and Beta are divisions within the same company. The managers of both divisions are evaluated based on their own division's return on investment (ROI). Assume the following information relative to the two divisions: Case Alpha Division: Capacity in units 4 209,000 54,000 303,000 105,000 Number of units now being sold to outside customers 54,000 303,000 78,000 209,000 Selling price per unit to outside. customers $ 10) $ 41 562 $43 Variable costs per unit 566 $ 21 5:36 $ 28 Fixed costs per unit (based on capacity) $29 58 5 10 $5 Beta Division: Number of units needed annually 9,600 74,000 24,000 64,000 Purchase price now being paid to an outside supplier $95 $38 $62 "Before any purchase discount. Required: 1. Refer to case 1 shown above. Alpha Division can avoid $5 per unit in commissions on any sales to Beta Division. a. What is Alpha Division's lowest acceptable transfer price? b. What is Beta Division's highest acceptable transfer price? c. What is the range of acceptable transfer prices (if any) between the two divisions? Will the managers probably agree to a transfer? 2. Refer to case 2 shown above. A study indicates that Alpha Division can avoid $6 per unit in shipping costs on any sales to Beta Division. a. What is Alpha Division's lowest acceptable transfer price? b. What is Beta Division's highest acceptable transfer price? c. What is the range of acceptable transfer prices of any) between the two divisions? Would you expect any disagreement between the two divisional managers over what the exact transfer price should be? d. Assume Alpha Division offers to sell 74,000 units to Beta Division for $37 per unit and that Beta Division refuses this price. What will 3. Refer to case 3 shown above. Assume that Beta Division is now receiving an 6% price discount from the outside supplier a. What is Alpha Division's lowest acceptable transfer price? b. What is Beta Division's highest acceptable transfer price? c. What is the range of acceptable transfer prices (if any) between the two divisions? Will the managers probably agree to a transfer? d. Assume Beta Division offers to purchase 24.000 units from Alpha Division at $53.28 per unit. If Alpha Division accepts this price. would you expect its ROI to increase, decrease, or remain unchanged? 4. Refer to case 4 shown above. Assume that Beta Division wants Alpha Division to provide it with 64,000 units of a different product from the one Alpha Division is producing now. The new product would require $22 per unit in vartable costs and would require that Alpha Division cut back production of its present product by 32.000 units annually. What is Alpha Division's lowest acceptable transfer price? Complete this question by entering your answers in the tabs below. Req 1A to 1C Req 2A to 2D Req 3A to 3D Req 4 1. Refer to case 1 shown above. Alpha Division can avoid $5 per unit in commissions on any sales to Beta Division, a. What is Alpha Division's lowest acceptable transfer price? b. What is Beta Division's highest acceptable transfer price? c. What is the range of acceptable transfer prices (if any) between the two divisions? Will the managers probably agree to a transfer? Show less A Identify the lowest and highest acceptable transfer prices Lowest acceptable transfer price Highest acceptable transfer price Identify the range of acceptable transfer prices (if any) Next # Req 1A to 1C Req 2A to 2D Req 3A to 3D Req 4 1. Refer to case 1 shown above. Alpha Division can avoid $5 per unit in commissions on any sales to Beta Division. a. What is Alpha Division's lowest acceptable transfer price? b. What is Beta Division's highest acceptable transfer price? c. What is the range of acceptable transfer prices (if any) between the two divisions? Will the managers probably agree to a transfer? Identify the lowest and highest acceptable transfer prices Lowest acceptable transfer price Highest acceptable transfer price Identify the range of acceptable transfer prices (if any) There is not a range of acceptable transfer prices There is a range of acceptable transfer prices as shown below S Transfer price S Will the managers agree to the trade? OYes No Reg 1A to 10 Req 2A to 2D > d. Assume Alpha Division offers to sell 74,000 units to Beta Division for $37 per unit and that Beta Division refuses this price. What will be the loss in potential profits for the company as a whole? Show less& Identify the lowest and highest acceptable transfer prices Lowest acceptable transfer price Highest acceptable transfer price Identify the range of acceptable transfer prices (if any) There is not a range of acceptable transfer prices There is a range of acceptable transfer prices as shown below Transfer price 5 S Will the managers agree to the trade? OYes ONO Loss in potential profits for the company (Round your final answers to 2 decimal places.) Identify the lowest and highest acceptable transfer prices Lowest acceptable transfer price Highest acceptable transfer price Identify the range of acceptable transfer prices (if any) There is not a range of acceptable transfer prices There is a range of acceptable transfer prices as shown below Transfer price 6 Will the managers agree to the trade? Yes ONO Division A's ROI should Increase Decrease Show less price? Complete this question by entering your answers in the tabs below. Req 1A to 1C Req 2A to 2D Req 3A to 3D Req 4 Refer to case 4 shown above. Assume that Beta Division wants Alpha Division to provide it with 64,000 units of a different product from the one Alpha Division is producing' now. The new product would require $22 per unit in variable costs and would require that Alpha Division cut back production of its prsent product by 32,000 units annually. What is Alpha Division's lowest acceptable transfer price? Lowest acceptable transfer price Next > Prov 1 of 1

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Students also viewed these Accounting questions

Question

What is the formula to calculate the mth Fibonacci number?

Answered: 1 week ago