Quest Motors manufactures airbags. Division A operates at full capacity and can manufacture 500 airbags a...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Quest Motors manufactures airbags. Division A operates at full capacity and can manufacture 500 airbags a month. The variable manufacturing cost to Division A is $108 per airbag. Division A can sell airbags in the marketplace for $200 each. If sold in the marketplace, Division A incurs a shipping cost of $30 per airbag. The alternative is to transfer the airbags to Division B. Division B can acquire airbags from external suppliers at a cost of $180 each plus a $2 environmental levy. Required a. Using the general transfer pricing guideline, what is the minimum price Division A should take for the airbags if sold Division B? b. What is the maximum transfer price Division B is willing to pay Division A for the airbags? Assume instead, that Division A can only sell 60% of the airbags produced. What is the minimum transfer price Division A would accept from Division B? C. Quest Motors manufactures airbags. Division A operates at full capacity and can manufacture 500 airbags a month. The variable manufacturing cost to Division A is $108 per airbag. Division A can sell airbags in the marketplace for $200 each. If sold in the marketplace, Division A incurs a shipping cost of $30 per airbag. The alternative is to transfer the airbags to Division B. Division B can acquire airbags from external suppliers at a cost of $180 each plus a $2 environmental levy. Required a. Using the general transfer pricing guideline, what is the minimum price Division A should take for the airbags if sold Division B? b. What is the maximum transfer price Division B is willing to pay Division A for the airbags? Assume instead, that Division A can only sell 60% of the airbags produced. What is the minimum transfer price Division A would accept from Division B? C.
Expert Answer:
Answer rating: 100% (QA)
a Using the general transfer pricing guideline what is the minimum price Division A should take for ... View the full answer
Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0133392883
6th Canadian edition
Authors: Horngren, Srikant Datar, George Foster, Madhav Rajan, Christ
Posted Date:
Students also viewed these accounting questions
-
Walker Inc. has two divisions, Circuit and Satellite, both located in the United States. The Circuit division produces an electronic component, circuit no. 222, which is sold to external customers....
-
Julie H. Hertenstein ABSTRACT: Component Technologies, Inc. (CTI) manufactures components used in electronic devices. CTI is considering adding manufacturing capacity for FlexConnex to meet increased...
-
Wood Inc. manufactures wood poles. It has two divisions, Harvesting and Sawing, which are both evaluated as profit centres. The Harvesting Division is responsible for all the harvesting operations...
-
JD is a 25 year old patient who sustained massive head trauma and neurological injury in a motorcycle accident. He is not brain dead, but after 4 weeks in MICU and several neuro consults, the...
-
Consider a U-tube whose arms are open to the atmosphere. Now water is poured into the U-tube from one arm, and light oil (r = 790 kg/m3) from the other. One arm contains 70-cm-high water, while the...
-
List four major sources of primary information.
-
Sheri Neylon has trouble keeping her debits and credits equal. During a recent month, Sheri made the following errors: a. Sheri recorded a $850 payment of rent by debiting Rent Expense for $85 and...
-
Prepare a cash flow projection for a construction company that currently has two projects under contract for the next year and anticipates picking up a third and fourth project during the year. For...
-
Wealth Management Part 2: A Financial and Taxation Case Study Question 2: Case study You are a financial adviser, and the following information is an extract of data you gathered as part of...
-
Fly-by-Night is an international airline company. Its fleet includes Boeing 757s, 747s, 727s, Lockheed L-1011s, and McDonnell Douglas MD-83s, MD-80s, and DC-9s. Assume that Fly-by-Night made the...
-
Characteristics of a straddle under the Internal Revenue Code include all of the following EXCEPT Question 14 options: intent to substantially limit the risk of loss. the hedge involves the same...
-
What is a compound pendulum?
-
Define the following terms and briefly indicate their importance to planning an audit engagement: audit risk, inherent risk, control risk, environment risk, and detection risk.
-
Write the relationship between coefficient of fluctuation of speed, maximum fluctuation of energy and kinetic energy of flywheel.
-
Given the following potential errors by the auditor, explain why one is more important than the other: a. The auditor issues an unqualified audit opinion on financial statements that are materially...
-
Write the procedure for determining the turning moment diagram.
-
If the APR is 12%, but there is weekly compounding, what is the periodic rate?If you buy a security that will pay you 2,000 every year forever, and the appropriate rate of interest is 3.5%, what is...
-
Dan and Diana file a joint return. Dan earned $31,000 during the year before losing his job. Diana received Social Security benefits of $5,000. a. Determine the taxable portion of the Social Security...
-
Technology of the Past (TOP) produces old-fashioned simple corkscrews. Last year was not a good year for sales but TOP expects the market to pick up this year. Last year's income statement showed...
-
Panther Productions has just finished production of the most recent sequel in its Illinois Jones series. The film cost $22 million to produce. Most production personnel and actors were paid a fixed...
-
Okanagan Orchard Products Ltd. is a manufacturer of jams and jellies. It distributes its products to food retailers across Canada. Okanagan's objective is to be the number one distributor of its...
-
Determine the displacement of point \(C\). The beam is made from A992 steel and has a moment of inertia of \(I=53.8 \mathrm{in}^{4}\). 8 kip A B -5 ft- -10 ft 5 ft-
-
Determine the slope at \(B\). The beam is made from A992 steel and has a moment of inertia of \(I=53.8 \mathrm{in}^{4}\). 8 kip A B -5 ft- 10 ft- -5 ft-
-
The beam is made of Douglas fir. Determine the slope at \(C\). 8 kN BO -1.5m 1.5m- -1.5 m- 180 mm H 120 mm
Study smarter with the SolutionInn App