User Account

All Pages

Calculate the minimum transfer price

Assignment Help Financial Accounting
Reference no: EM133011722

Question - SG is a division of Gibco and produces barbeques. SG sells these barbeques to big box stores like Home Depot and Lowes, as well as to GS BBQ Stores which is a division of Gibco. The following information is available for SG:

Fixed costs per unit $150

Variable cost per unit 102

SG Selling price to Home Depot/Lowes 542

GS can purchase comparable barbeques from a Weber BBQ for $463. To avoid too much reliance on an external supplier, Gibco management wants SG to provide 19,000 barbeques per year at a transfer price of $475 per unit to GS BBQ Stores. GS sells these barbeques for $900. SG is currently operating at full capacity. By selling to GS, SG can avoid $7 per unit of variable selling costs. SG manufactures a total of 100,000 barbeques a year.

Required -

1. Calculate the minimum transfer price that SG would charge to remain financially neutral.

2. Calculate the increase (decrease) in TOTAL contribution margin for Gibco for the above transfer price you calculated in number 1 for 19,000 units.

3. The tax rate for SG, which is in the USA is 35%, and is 25% for GS which is in Canada. Is it better for Gibco to sell at $542 or $463? By how much? Enter the TOTAL $ advantage at 19,000 units.

4. The tax rate for SG, which is in the USA, is 25%, and is 35% for GS which is in Canada. Is it better for Gibco to sell at $480 or $575? By how much? Enter the TOTAL $ advantage at 19,000 units.

Please explain all calculations in detail so I can understand the mathematical part. Thank you so much!

Reference no: EM133011722

Questions Cloud

Dynamism in a firm external environment : The concept of human resource planning is irrelevant because of the dynamism in a firm's external environment. What is your take?
What would be the total amount of dividend expense on dec : What would be the total amount of the dividend expense on december 31, 2018. June 30 2016 reacquired 5000 shares of common stock as treasury stock
Explain the team diversity by highlighting : Give at least three examples of when you have worked or studied in a team (university/work) with people from diverse backgrounds. Explain the team diversity by
Find how many shares of common stock are issued : How many shares of common stock are issued? Paid in capital in excess of par common stock 50000. common stock $2 par value $80000
Calculate the minimum transfer price : GS can purchase comparable barbeques from a Weber BBQ for $463. Calculate the minimum transfer price that SG would charge
Identify your pico or research question : Conduct a literature search to identify 5 articles which address your PICO(T) question (articles should be recent-within the last 5 years, and quantitative
Allocate joint costs using the net realizable value method : Allocate joint costs using the net realizable value method. In the first department - Cutting - 117,000 pounds of direct materials are processed at a total cost
Record the incurrence of actual variable overhead : Prepare journal entries to: Record the incurrence of actual variable overhead and actual fixed overhead
What is the difference between acquisition and merger : What is horizontal merger or acquisition, vertical merger or acquisition, and conglomerate merger? What is the difference between acquisition and merger

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd