Determining Market-Based and Negotiated Transfer Prices Carreker, Inc., has a number of divisions, including the Alamosa...
Fantastic news! We've Found the answer you've been seeking!
Question:
![image](https://dsd5zvtm8ll6.cloudfront.net/si.experts.images/questions/2024/05/663afd99ab627_041663afd997e550.jpg)
Transcribed Image Text:
Determining Market-Based and Negotiated Transfer Prices Carreker, Inc., has a number of divisions, including the Alamosa Division, producer of surgical blades, and the Tavaris Division, a manufacturer of medical instruments. Alamosa Division produces a 2.6 cm steel blade that can be used by Tavaris Division in the production of scalpels. The market price of the blade is $21.00. Cost information for the blade is: Variable product cost $ 10.00 Fixed cost 5.40 Total product cost $15.40 Tavaris needs 15,000 units of the 2.6 cm blade per year. Alamosa Division is at full capacity (90,000 units of the blade). Required: Round your answers to the nearest cent. 1. If Carreker, Inc., has a transfer pricing policy that requires transfer at full product cost, what would the transfer price be? per unit Do you suppose that Alamosa and Tavaris divisions would choose to transfer at that price? Alamosa Tavaris No Yes 2. If Carreker, Inc., has a transfer pricing policy that requires transfer at full cost plus 25 percent, what would the transfer price be? per unit Do you suppose that Alamosa and Tavaris divisions would choose to transfer at that price? Alamosa Tavaris No Yes 3. If Carreker, Inc., has a transfer pricing policy that requires transfer at variable product cost plus a fixed fee of $2.00 per unit, what would the transfer price be? 12 per unit Do you suppose that Alamosa and Tavaris divisions would choose to transfer at that price? Alamosa Tavaris No Yes 4. What if Alamosa Division plans to produce and sell only 65,000 units of the 2.6 cm blade next year? The Carreker, Inc., policy is that all transfers be at full cost. Which division sets the minimum transfer price, and what is it? Alamosa $ per unit Which division sets the maximum transfer price, and what is it? Tavaris 21 per unit Do you suppose that Alamosa and Tavaris divisions would choose to transfer? Yes Determining Market-Based and Negotiated Transfer Prices Carreker, Inc., has a number of divisions, including the Alamosa Division, producer of surgical blades, and the Tavaris Division, a manufacturer of medical instruments. Alamosa Division produces a 2.6 cm steel blade that can be used by Tavaris Division in the production of scalpels. The market price of the blade is $21.00. Cost information for the blade is: Variable product cost $ 10.00 Fixed cost 5.40 Total product cost $15.40 Tavaris needs 15,000 units of the 2.6 cm blade per year. Alamosa Division is at full capacity (90,000 units of the blade). Required: Round your answers to the nearest cent. 1. If Carreker, Inc., has a transfer pricing policy that requires transfer at full product cost, what would the transfer price be? per unit Do you suppose that Alamosa and Tavaris divisions would choose to transfer at that price? Alamosa Tavaris No Yes 2. If Carreker, Inc., has a transfer pricing policy that requires transfer at full cost plus 25 percent, what would the transfer price be? per unit Do you suppose that Alamosa and Tavaris divisions would choose to transfer at that price? Alamosa Tavaris No Yes 3. If Carreker, Inc., has a transfer pricing policy that requires transfer at variable product cost plus a fixed fee of $2.00 per unit, what would the transfer price be? 12 per unit Do you suppose that Alamosa and Tavaris divisions would choose to transfer at that price? Alamosa Tavaris No Yes 4. What if Alamosa Division plans to produce and sell only 65,000 units of the 2.6 cm blade next year? The Carreker, Inc., policy is that all transfers be at full cost. Which division sets the minimum transfer price, and what is it? Alamosa $ per unit Which division sets the maximum transfer price, and what is it? Tavaris 21 per unit Do you suppose that Alamosa and Tavaris divisions would choose to transfer? Yes
Expert Answer:
Answer rating: 100% (QA)
1 If Carreker Inc has a transfer pricing policy that requires transfer at full product cost the tran... View the full answer
Related Book For
Cornerstones of Cost Management
ISBN: 978-1285751788
3rd edition
Authors: Don R. Hansen, Maryanne M. Mowen
Posted Date:
Students also viewed these accounting questions
-
2) Bill's income is $50,000. There is a 30% chance Bill will get sick during the next year. If Bill gets sick, he will incur a loss of $20,000. His utility function is U(I)=11.1 (that is, utility...
-
Carreker, Inc., has a number of divisions, including the Alamosa Division, producer of surgical blades, and the Tavaris Division, a manufacturer of medical instruments. Alamosa Division produces a...
-
Carreker, Inc., has a number of divisions, including the Alamosa Division, producer of surgical blades, and the Tavaris Division, a manufacturer of medical instruments. Alamosa Division produces a...
-
General Ledger Accounts Account: Cash Date Description Opening Balance Account: Date Petty Cash Description Opening Balance Account: Date Accounts Receivable Description Opening Balance Account: Date...
-
Discuss the effect that each of the following has on the confidence interval: a. Point estimate b. Level of confidence c. Sample size d. Variability of the characteristic being measured
-
Mathematical models for location take a simplified view and they only include the few factors that can most easily be quantified. So how useful are they for real decisions?
-
The _________ is the incorrect view that what is true for an individual is always true for the group.
-
The Sasoon Barber Shop employs four barbers. One barber, who also serves as the manager, is paid a salary of $3,000 per month. The other barbers are paid $1,500 per month. In addition, each barber is...
-
Use the geometric interpretation of the definite integral to compute: (2x+25-2) dx 25 25 2 5 N/ST 25 2
-
2202-MATH-13 Homework: 10.4 Installment Buying Score: 0 of 1 pt 14 of 17 (14 complete) 10.4.26 On July 3, the billing date, Marvin Zug had a balance due of $295.86 on his credit card. His card...
-
In a large manufacturing organization supplying goods and services, several departments may be involved in the processing of customer complaints and the issuance of any resulting credit memos. Those...
-
There are seven or more steps in a sales revenue cycle. Internal auditors expect to find one or more controls to assure performance of each step. One step is the acceptance of a customer's order....
-
Both internal and external auditors have a responsibility to study and evaluate internal control. Required: (a) Define internal control. (b) State the type of control that is concerned with the...
-
Provide the reasons for the following criteria of internal control: Organization criteria : The individual to whom authority is delegated should be required to exercise that authority, but should...
-
Your company's management is considering a proposal which would require the internal auditors to participate in collecting the bids and controlling the competitive bidding practices in the purchasing...
-
The molar solubility of Ag;PO4 is 5.63 10-7 mol/L. Calculate the solubility product, Ksp, of Ag3P04. You should get one of the following answers: O 1,0. 10-25 O 3, 2. 10-13 O 9,5. 10-13 O 1,8- 10-19...
-
Which, if any, of the dichloroethene molecules drawn in Data Table II (3.) (4.) and (5.) are geometric isomers? A. B. C. D. cis-1,2-dichloroethene and trans-1,2-dichloroethene...
-
Prepare brief written summaries of the following cases: Lehnhausen Complete Auto Transit Corp. v. Brady Quill Corp. Wayfair Organize your brief using the following sections: A. Facts B. Issues...
-
How do we usually distinguish between business and nonbusiness income? How are the two treated?
-
What are the common definitions of a unitary business?
![Mobile App Logo](https://dsd5zvtm8ll6.cloudfront.net/includes/images/mobile/finalLogo.png)
Study smarter with the SolutionInn App