Question: Please help me to do 2b and 2c In each of the cases below, assume Division X has a product that can be sold either

Please help me to do 2b and 2c In each of thePlease help me to do 2b and 2c

In each of the cases below, assume Division X has a product that can be sold either to outside customers or to Divisionn Y of the same company for use in its production process. The managers of the divisions are evaluated based on their divisional profits Case Division X: Capacity in units Number of units being sold to outside customers Selling price per unit to outside customers Variable costs per unit Fixed costs per unit (based on capacity) 109,000 95,000 109,000 78,000 55 $27 24 $18 Division Y: Number of units needed for production Purchase price per unit now being paid 17,000 17,000 to an outside supplier 49 $ 36 2. Refer to the data in case B above. In this case, there will be no savings in variable selling costs on intracompany sales a. What is the lowest acceptable transfer price from the perspective of the selling division? b. What is the highest acceptable transfer price from the perspective of the buying division? C. What is the range of acceptable transfer prices (if any) between the two divisions? If the managers are free to negotiate and make decisions on their own, will a transfer probably take place

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!