Solution-Calculate minimum transfer price that chip

Calculate minimum transfer price that chip division accept

Reference no: EM13888799

Watts Company makes various electronic products. The company is divided into a number of autonomous divisions that can either sell to internal units or sell externally. All divisions are located in buildings on the same piece of property. The Board Division has offered the Chip Division $20 per unit to supply it with chips for 30,000 boards. It has been purchasing these chips for $22 per unit from outside suppliers. The Chip Division receives $22.50 per unit for sales made to outside customers on this type of chip. The variable cost of chips sold externally by the Chip Division is $14.50. It estimates that it will save $4.50 per chip of selling expenses on units sold internally to the Board Division. The Chip Division has no excess capacity.

Instructions

(a) Calculate the minimum transfer price that the Chip Division should accept. Discuss whether it is in the Chip Division's best interest to accept the offer.

(b) Suppose that the Chip Division decides to reject the offer. What are the financial impli- cations for each division, and for the company as a whole, of this decision?

Reference no: EM13888799

Questions Cloud

Calculate minimum transfer price for communications division : For each of the following independent situations, calculate the minimum transfer price, and discuss whether the internal transfer should take place or whether the Personal Communications Division should purchase the pager externally.

What is the emv : What is the EMV for Option 1 and 2 in the following decision table? Which one would you choose and why?

Fed hopes to impact short-run inflation and output byalter : The Fed hopes to impact short-run inflation and output byaltering

Security engineering and infrastructure security engineering : 1. Explain the important differences between application security engineering and infrastructure security engineering. 2. For the MHC-PMS, suggest an example of an asset, exposure, vulnerability, attack, threat, and control.

Calculate minimum transfer price that chip division accept : Calculate the minimum transfer price that the Chip Division should accept. Discuss whether it is in the Chip Division's best interest to accept the offer.

Develop the information and identify the possible decisions : A decision-maker is using the maximax, maximin, and LaPlace criteria for the problem below. Develop the information and identify the possible decisions for each method.

Compute the labor rate for joses electronic repair shop : Compute the labor rate for Jose's Electronic Repair Shop for the year 2014. Compute the material loading charge percentage for Jose's Electronic Repair Shop for the year 2014.

How should a business use working capital analysis? : How should a business use working capital analysis?

Poor operational procedures : She asserts that the problems must be due to poor operational procedures. A newspaper approaches you for your opinion. Discuss how you should handle such an interview.

User Account

All Pages

Calculate minimum transfer price that chip division accept

Reference no: EM13888799

Reference no: EM13888799

Questions Cloud

Reviews

Write a Review

Cost Accounting Questions & Answers

Cost accounting assignment

Prepare the journal entries

Advise as to the liability of all the parties

Prepare revenues budget

Effect of exchange rate changes on cash and cash

Corporate governance

Cost-benefit analysis

Non-annual interest rates and annuities

Job costing in service organizations

Accounting for bad debt expense

Accounting and partnership problems

Development of relevant cash flows

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT