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please write the answer in a way i could understand it please thats the only info i have what else yall lolking for? Joe Michael
please write the answer in a way i could understand it please
thats the only info i have what else yall lolking for?
Joe Michael is the CEO of The Melting Pot, a producer of premium ice cream. The Melting Pot has two divisions, the supplying division and the processing division. 1. (Click the icon to view the additional information regarding the divisions.) Read the requirements. Requirement 1. What is the profit for the supplying division of supplying 10 gallons of milk to the processing division under Joe's transfer pricing system? Do you think that the transfer pricing system incentivizes the managers of the supplying division to work hard, as Joe intends? What is the profit for the supplying division of supplying 10 gallons of milk to the processing division under Joe's transfer pricing system? Select the formula and enter the amounts to calculate the profit for the supplying division. (Complete all input fields. Enter a 0 for any zero balances.) Requirements 1. What is the profit for the supplying division of supplying 10 gallons of milk to the processing division under Joe's transfer pricing system? Do you think that the transfer pricing system incentivizes the managers of the supplying division to work hard, as Joe intends? 2. In the back of Joe's mind is that one of the larger competitors may be interested in buying only one of the divisions, and not his entire company. He is patting himself on the back for choosing the transfer pricing system since, in his view, it makes the profitability of each of the two divisions look very good. Do you agree with Joe? Requirements 1. What is the profit for the supplying division of supplying 10 gallons of milk to the processing division under Jonce's transfer pricing system? Do you think that the transfer pricing system incentivizes the managers of the supplying division to work hard, as Jonce intends? 2. In the back of Jonce's mind is that one of the larger competitors may be interested in buying only one of the divisions, and not his entire company. He is patting himself on the back for choosing the transfer pricing system since, in his view, it makes the profitability of each of the two divisions look very good. Do you agree with Jonce? More info The supplying division supplies milk, the main ingredient, to the processing division. Jonce is an ambitious entrepreneur, and he is hoping to soon sell Chill Zone, which is a private company, to one of the larger competitors. The supplying division buys mik from local farmers for $11 per 10 gallons, and incurs $4 of variable costs per 10 gallons transported to the processing division (the supplying division doesn't incur any material fixed costs). The processing division could buy milk of the same high quality for $18 per 10 gallons on the outside market. Jonce is trying to "whip his company into shape" by implementing a transfer pricing system that he views as providing very strong incentives for the two divisions to work hard: The supplying division will get reimbursed for its incremental costs of supplying the milk to the processing division; the processing division is charged the price that it would have to pay on the open market Step by Step Solution
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