Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to external customers for $30

image text in transcribed
image text in transcribed
The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to external customers for $30 per unit. Variable costs for the casing are $12 per unit and fixed cost is $4 per unit. Cotwold executives would like for the Molding Division to transfer 13,000 units to the Assembly Division at a price of $23 per unit. Assume that the Molding Division has excess capacity, but the Assembly Division requires the casing to be made from a specific blend of plastics. This would raise the variable cost per unit to $25. Required: 1. Should the Molding Division accept the $23 transfer price proposed by management? 2. Determine the minimum transfer price that it will accept 3. Determine the mutually beneficial transfer price so that the two divisions equally split the profits from the transfer. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Determine the minimum transfer price that it will accept. Minimum Transfer Price The Molding Division of Cotwold Company manufactures a plastic casing used by the Assembly Division. This casing is also sold to external customers for $30 per unit. Variable costs for the casing are $12 per unit and fixed cost is $4 per unit. Cotwold executives would like for the Molding Division to transfer 13,000 units to the Assembly Division at a price of $23 per unit. Assume that the Molding Division has excess capacity, but the Assembly Division requires the casing to be made from a specific blend of plastics. This would raise the variable cost per unit to $25. Required: 1. Should the Molding Division accept the $23 transfer price proposed by management? 2. Determine the minimum transfer price that it will accept. 3. Determine the mutually beneficial transfer price so that the two divisions equally split the profits from the transfer Complete this question by entering your answers in the tabs below. Required 1 Required 2 Repuired 3 Determine the mutually beneficial transfer price so that the two divisions equally split the profits from the transfer. (Round your answer to 2 decimal places.) Mutually Beneficial Transfer Price

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

Financial Accounting

Authors: Belverd E. Needles

5th Edition

0395698022, 978-0395698020

More Books

Students also viewed these Accounting questions

Question

Outline the three steps in time management and in money management.

Answered: 1 week ago

Question

Describe the concept of diversity.

Answered: 1 week ago

Question

Summarize forecasting human resource availability.

Answered: 1 week ago