San Jose Company operates a Manufacturing Division and an Assembly Division. Both divisions are evaluated as...
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San Jose Company operates a Manufacturing Division and an Assembly Division. Both divisions are evaluated as profit centers. Assembly buys components from Manufacturing and assembles them for sale. Manufacturing sells many components to third parties in addition to Assembly. Selected data from the two operations follow. Manufacturing Capacity (units) 410,000 Assembly 210,000 Sales price $ 420 $ 1,350 Variable costs b $ 210 $ 500 Fixed costs $40,100,000 $24,100,000 a For Manufacturing, this is the price to third parties. b For Assembly, this does not include the transfer price paid to Manufacturing. Required: a. Current production levels in Manufacturing are 210,000 units. Assembly requests an additional 50,000 units to produce a special order. What transfer price would you recommend? b. Suppose Manufacturing is operating at full capacity. What transfer price would you recommend? c. Suppose Manufacturing is operating at 385,000 units. What transfer price would you recommend? (Round your answer to 2 decimal places.) a. Optimal transfer price per unit b. Transfer price per unit c. Transfer price per unit San Jose Company operates a Manufacturing Division and an Assembly Division. Both divisions are evaluated as profit centers. Assembly buys components from Manufacturing and assembles them for sale. Manufacturing sells many components to third parties in addition to Assembly. Selected data from the two operations follow. Manufacturing Capacity (units) 410,000 Assembly 210,000 Sales price $ 420 $ 1,350 Variable costs b $ 210 $ 500 Fixed costs $40,100,000 $24,100,000 a For Manufacturing, this is the price to third parties. b For Assembly, this does not include the transfer price paid to Manufacturing. Required: a. Current production levels in Manufacturing are 210,000 units. Assembly requests an additional 50,000 units to produce a special order. What transfer price would you recommend? b. Suppose Manufacturing is operating at full capacity. What transfer price would you recommend? c. Suppose Manufacturing is operating at 385,000 units. What transfer price would you recommend? (Round your answer to 2 decimal places.) a. Optimal transfer price per unit b. Transfer price per unit c. Transfer price per unit
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a The special order can be served out of the excess capacity of the Manufac... View the full answer
Related Book For
Fundamentals of Cost Accounting
ISBN: 978-1259565403
5th edition
Authors: William Lanen, Shannon Anderson, Michael Maher
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