Atascadero Industries operates a Manufacturing Division and a Marketing Division. Both divisions are evaluated as profit...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Atascadero Industries operates a Manufacturing Division and a Marketing Division. Both divisions are evaluated as profit centers. Marketing buys products from Manufacturing and packages them for sale. Manufacturing sells many components to third parties in addition to Marketing. Selected data from the two operations follow. Marketing Manufacturing 1,000,000 Capacity (units) 500,000 4,550 $ 1,400 $ Sales pricea Variable costsb $ 560 $ 1,680 $10,000,000 $7,200,000 Fixed costs a For Manufacturing, this is the price to third parties. b For Marketing, this does not include the transfer price paid to Manufacturing. Suppose Manufacturing is located in Country X with a tax rate of 65 percent and Marketing in Country Y with a tax rate of 35 percent. All other facts remain the same. Required: a. Current production levels in Manufacturing are 500,000 units. Marketing requests an additional 100,000 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 920,000 units. What transfer price would you recommend? a. Transfer price per unit b. Transfer price per unit c. Transfer price per unit Atascadero Industries operates a Manufacturing Division and a Marketing Division. Both divisions are evaluated as profit centers. Marketing buys products from Manufacturing and packages them for sale. Manufacturing sells many components to third parties in addition to Marketing. Selected data from the two operations follow. Marketing Manufacturing 1,000,000 Capacity (units) 500,000 4,550 $ 1,400 $ Sales pricea Variable costsb $ 560 $ 1,680 $10,000,000 $7,200,000 Fixed costs a For Manufacturing, this is the price to third parties. b For Marketing, this does not include the transfer price paid to Manufacturing. Suppose Manufacturing is located in Country X with a tax rate of 65 percent and Marketing in Country Y with a tax rate of 35 percent. All other facts remain the same. Required: a. Current production levels in Manufacturing are 500,000 units. Marketing requests an additional 100,000 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 920,000 units. What transfer price would you recommend? a. Transfer price per unit b. Transfer price per unit c. Transfer price per unit
Expert Answer:
Answer rating: 100% (QA)
Solution Solution a Current product level is 500000 u... View the full answer
Related Book For
Fundamentals of Cost Accounting
ISBN: 978-1259565403
5th edition
Authors: William Lanen, Shannon Anderson, Michael Maher
Posted Date:
Students also viewed these accounting questions
-
Atascadero Industries operates a Manufacturing Division and a Marketing Division. Both divisions are evaluated as profit centers. Marketing buys products from Manufacturing and packages them for...
-
Refer to the information in Exercise. Suppose Manufacturing is located in Country A with a tax rate of 60% and Assembly in Country B with a tax rate of 40%. All other facts remain the same. In...
-
Mountain Industries operates a Manufacturing Division and an Assembly Division. Both divisions are evaluated as profit centers. Assembly buys components from Manufacturing and assembles them for...
-
Classify the effect of a distribution in a year when the distributing corporation has the following conditions. a. A deficit in accumulated E & P and a positive amount in current E & P. If a...
-
Can stress management/fitness and diet be accomplished separately? If so, why?
-
Which of the following quantities is likely to show more temporal autocorrelation: daily rainfall or daily temperature? Why?
-
Since opening its doors in Hawaii two years ago, Oriental Trading has enjoyed tremendous success. As a wholesaler, Oriental Trading purchases textiles from Asian markets and resells them to local...
-
Solve the following linear programming problem graphically: Maximize profit = 4X + 6Y Subject to: X + 2Y 8 5X + 4Y 20 X,Y 0
-
ces Supply Club, Incorporated, sells a variety of paper products, office supplies, and other products used by businesses and individual consumers. During July 2024, it started a loyalty program...
-
Champion Inc. purchased a call option as a speculative investment on January 1 for $125, allowing Champion Inc. to purchase 200 of Rising Star Co. common shares at $100 per share through January 1 of...
-
Transactions that affect inventories on hand have an effect on both the statement of financial position and the income statement. Select one: a. False b. True
-
Explain the interrelationships among audit risk, materiality and audit evidence.
-
Identify the four phases of a financial statement audit and discuss the time frame in which each of these occurs.
-
How can analytical procedures assist the auditor in audit planning?
-
The following table depicts the auditor's estimated computed upper deviation rate compared with the tolerable deviation rate, and it also depicts the true population deviation rate compared with the...
-
Is it ever appropriate under Auditing Standards for the auditors to conclude that inherent and control risks are so low it is unnecessary to verify any assertions by substantive procedures for any...
-
What is the FCF if the OCF was 3705 and Depreciation expense $1,540 Earnings before interest and taxes (EBIT) 2740 Interest expense 365 Net profits after taxes 1876 Tax rate 21%?
-
Cobb Manufacturing Company uses a process cost system and average costing. The following production data is for the month of June 2011. Production Costs Work in process, beginning of the month:...
-
Tiger Furnishingss CFO believes that a two-stage cost allocation system would give managers better cost information. She asks the companys cost accountant to analyze the accounts and assign overhead...
-
The accounting department of a large limousine company is analyzing the costs of its services. The cost data and level of activity for the past 16 months follow: In addition to the above information,...
-
How does a value income statement differ from a gross margin income statement? From a contribution margin income statement?
-
Write down careful proofs of the following statements: (a) \(\sqrt{6}-\sqrt{2}>1\). (b) If \(n\) is an integer such that \(n^{2}\) is even, then \(n\) is even. (c) If \(n=m^{3}-m\) for some integer...
-
Prove by contradiction that a real number that is less than every positive real number cannot be positive.
-
Disprove the following statements: (a) If \(n\) and \(k\) are positive integers, then \(n^{k}-n\) is always divisible by \(k\). (b) Every positive integer is the sum of three squares (the squares...
Study smarter with the SolutionInn App