Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Transfer pricing The Bat Division of Baseball Company has just revised its actual cost data for 2001. Bat Division plans to transfer 50,000 units of

Transfer pricing

The Bat Division of Baseball Company has just revised its actual cost data for 2001. Bat Division plans to transfer 50,000 units of its goods to the Sport Division. Sport Division can buy the same goods in the open market for $122 each. Bats new cost data are:

Direct materials $40 Direct labor 30 Variable overhead 10 Fixed overhead 16 Variable selling expenses 6 Fixed selling and administrative expenses 12 Total costs $106 Desired return 20 Sales price $126 Current production is 200,000 units, and the Bat Division has a capacity of 300,000 units.

Required: a. What is the lowest price the Bat Division should charge for the internal transfers of its goods? b. What is the highest price the Sport Division should pay for the units?

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 AND COSTING

Authors: Meera Gopi Krishna

1st Edition

979-8604687369

More Books

Students also viewed these Accounting questions