Paint Corporation owns 60 percent of Stain Company's shares. Partial 20X2 financial data for the companies and consolidated entity were as follows: Sweeny Corporation Bitner Company
Sales $550,000 $450,000
Cost of Goods Sold 310,000 300,000
Inventory, Dec. 31 180,000 210,000

On January 1, 20X2, Sweeny's inventory contained items purchased from Bitner for $75,000. The cost of the units to Bitner was $50,000. All intercorporate sales during 20X2 were made by Bitner to Sweeny.

Required:

a. What amount of intercorporate sales occurred in 20X2?
b. How much unrealized intercompany profit existed on January 1, 20X2? On December 31, 20X2?
c. Prepare the worksheet consolidation entries relating to inventory and cost of goods sold needed to prepare consolidated financial statements for 20X2.

In each of the cases below, assume division x has a product that can be sold either to outside customers or to division y of the same company for use in its production process. the managers of the divisions are evaluated based on their divisional profits. case a b division x: capacity in units 200,000 200,000 number of units being sold to outside customers 200,000 160,000 selling price per unit to outside customers $ 90 $ 75 variable costs per unit $ 70 $ 60 fixed costs per unit (based on capacity) $ 13 $ 8 division y: number of units needed for production 40,000 40,000 purchase price per unit now being paid to an outside supplier $ 86 $ 74 required: 1. refer to the data in case a above. assume in this case that $3 per unit in variable selling costs can be avoided 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?