Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Robin Company's A Division produces a small component used by other companies as a key part in their products. Cost and sales data relating to

image text in transcribed
Robin Company's A Division produces a small component used by other companies as a key part in their products. Cost and sales data relating to the component are given below: Selling price per unit $50 Variable costs per unit 30 Fixed costs per unit 12 *Based on A Division's capacity of 40,000 component per year. Robin Company's B Division is introducing a new product that will use a component such as the one produced in the A Division. An outside supplier has quoted the B Division a price of 548 per component. The B Division would like to purchase the components from the A Division instead if an acceptable transfer price can be worked out. The B Division requires 12.000 components per year and the A Division is presently selling 34,000 components per year to outside customers. Required: & From the standpoint of the entire company, what is the incremental benefit to the company if the A Division supplies the 8 Division with 12.000 components per year? (4 marks) b Calculate the maximum and minimum transfer price per unit. (3 marks) C. Assume the managers of the two divisions agree on a transfer price of $46 per component Calculate the net benefit to each division of making a transfer of 12,000 components per year

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

Foundations Of Managerial Accounting

Authors: Dr. Susan Galbreath

1st Edition

0390786276, 978-0390786272

More Books

Students also viewed these Accounting questions