Business, 20.05.2021 17:30 twocutebabe26

Chic Cycle Inc., has two divisions, A and? B, which manufacture expensive bicycles. Division A produces the bicycle frame, and division B assembles the rest of the bicycle onto the frame. There is a market for both the subassembly and the final product. Each division has been designated as a profit center. The transfer price for the subassembly has been set at the long-run average market price. The following data are available for each division: Selling price for final product $3000
Long-run average selling price
for intermediate product 2000
Incremental cost per unit for completion in division B 1500
Incremental cost per unit in
division A 1200

The manager of division B has made the following calculation:
Selling price for final product $3000
Transferred-in cost per
unit (market) $2000
Incremental cost per unit
for completion 1500 $3500
Contribution (loss) on product $(500)

a. Should transfers be made to division B if there is no unused capacity in division A? Is the market price the correct transfer price? Show your computations.
b. Assume that division A's maximum capacity for this product is 1,000 units per month and sales to the intermediate market are now 800 units.
Should 200 units be transferred to division B? At what transfer price? Assume that for a variety of reasons, division A will maintain the $2000 selling price indefinitely. That is, division A is not considering lowering the price to outsider buyers even if idle capacity exists.

c. Suppose division A quoted a transfer price of $1500 for up to 200 units. What would be the contribution to the company as a whole if a transfer were made? As manager of division B, would you be inclined to buy at $1500? Explain.

Answers: 3

Show answers

Another question on Business

Business, 21.06.2019 21:00

Symantec corp., located in cupertino, california, is one of the world's largest producers of security and systems management software. the company's consolidated balance sheets for the 2009 and 2008 fiscal years included the following ($ in thousands): current assets: receivables, less allowances of $21,766 in 2009 and $24,089 in 2008 $ 838,010 $ 758,700 a disclosure note accompanying the financial statements reported the following ($ in thousands): year ended 2009 2008 (in thousands) trade accounts receivable, net: receivables $ 859,776 $ 782,789 less: allowance for doubtful accounts (8,938) (8,990) less: reserve for product returns (12,828) (15,099) trade accounts receivable, net: $ 838,010 $ 758,700 assume that the company reported bad debt expense in 2009 of $2,000 and had products returned for credit totaling $3,230 (sales price). net sales for 2009 were $6,174,800 (all numbers in thousands).required: what is the amount of accounts receivable due from customers at the end of 2009 and 2008? what amount of accounts receivable did symentec write off during 2009? what is the amount of symentec’s gross sales for the 2009 fiscal year? assuming that all sales are made on a credit basis, what is the amount of cash symentec collected from customers during the 2009 fiscal year?

Answers: 3

Answer

Business, 21.06.2019 23:30

Which term refers to the cost that motivates an economic decision

Answers: 1

Answer

Business, 22.06.2019 00:30

Refers to the way we conduct ourselves

Answers: 2

Answer

Business, 22.06.2019 13:20

Suppose farmer lane grows and sells cotton in a perfectly competitive industry. the market price of cotton is $1.64 per kilogram, and his marginal cost of production is $1.44 per kilogram, which increases with output. assume farmer lane is currently earning a profit. can farmer lane do anything to increase his profit in the short run? farmer lane: a. cannot do anything to increase his profit. b. may or may not be able to increase his profit. c. can increase his profit by raising his price. d. can increase his profit by producing more output. e. can increase his profit by shutting down.

Answers: 1

Answer

You know the right answer?

Chic Cycle Inc., has two divisions, A and? B, which manufacture expensive bicycles. Division A produ...

Questions