Calculate transfer prices at which metro division offer

Assignment Help Financial Accounting
Reference no: EM132939844

Producers Limited has two (2) divisions, the Metro division and the Ultra Division. Currently the Metro Division sells a part (ARP601) on the market for $240 per unit. The Ultra Division wants to buy the part from the Metro Division for a price yet to be determined. The production capacity of the Metro Division is 12,000 units annually.

The cost per unit data (ARP 601) for the Metro Division is as follows:
$
Direct Materials 60
Direct Labour 70
Variable Overhead 25
Fixed overhead 15

Required

Problem 1: Explain and calculate the transfer prices at which Metro Division should offer to transfer the part to the Ultra Division in order that the group profit maximizing decisions may be taken on financial grounds in each of the following independent situations:

(a) The Metro Division has no spare capacity and the Ultra Division wants to purchase 6000 units.

(b) Metro Division has excess capacity to supply all parts needed by the Ultra Division.

(c) Metro Division has excess capacity for only 3,000 of the total 5,000 parts needed by the Ultra Division. However, the Ultra Division has an alternative use of this excess capacity which provides to a contribution of $6 for each part.

Reference no: EM132939844

Questions Cloud

Preparing a cvp income statement : Preparing a cvp income statement for 2020 based on these estimates. The beverage is sold for 50 cents per 16-ounce bottle to retailers
What is value of stock when first becomes constant growth : If Koman has a required rate of return of 0.14, what is terminal value of the stock or what is the value of the stock when first becomes a constant growth stock
What ratios reveals about the companies are analyzing : What ratios reveals about the companies you're analyzing. Using the financial data for Apple Inc, and General Electric preform a ration analysis.
Find what is the present worth of the defender : Waldorf Manufacturing is operating a production facility, which will be closed in 5 years. What is the present worth of the defender?
Calculate transfer prices at which metro division offer : Calculate the transfer prices at which Metro Division should offer to transfer the part to the Ultra Division in order that the group profit maximizing decision
What is the value of a security with an expected growth rate : What is the value of a security with an expected growth rate of 0.03, if the stock just paid a dividend of $4.1 and according to the Capital Asset Pricing Model
How much in dividends did the firm pay to shareholders : How much in dividends did the firm pay to shareholders during the year? In its most recent financial statements, Del-Castillo Inc. reported $50 million.
How the accrual concept is applied in governments : How the accrual concept is applied in governments on one of the following expenses: compensated absences, pension and OPEB, claims and judgments
What is the estimated probability of patrick flipping a head : What is the estimated probability of Patrick flipping a head with his lucky coin? Patrick flipped his lucky coin 14 times and got 8 heads. Patrick used numbers.

Reviews

Write a Review

Financial Accounting Questions & Answers

  Calculate federal and provincial tax payable

Joan Matel is a resident of Ontario, Calculate her 2019 federal and provincial Tax Payable before consideration of credits, and her average rate of tax.

  Bond-rating agencies were accused of unethical behavior

Prior to the financial meltdown that occurred around 2008, bond-rating agencies were accused of unethical behavior because they were paid by the organizations that they rated. Many of these companies would shop around for the agency that gave them th..

  Provide a comparative analysis showing net income

Provide a comparative analysis showing net income and net cash provided by operating activities (ignoring other accrual adjustments)

  Solutions or approaches to the problem

Using information or data found in the case study, as well as from course materials and your own research, offer two or more solutions or approaches to the problem.

  Calculate the incremental irr for the two projects

Godfall Inc., The required rate of return on these projects is 6%. Calculate the incremental IRR (aka cross-over rate) for the two projects.

  Uses the percentage of credit sales method

BlaBla Inc. has the following balances before doing adjusting entries for the year ended 12/31/Year4. All sales were on credit. The allowance has a DEBIT (abnormal) balance. Assume that BlaBla Inc. uses the percentage of credit sales method, and esti..

  Make of schedule of cost of goods manufactured

Make of schedule of cost of goods manufactured and cost of goods sold and purpose a schedule of cost of goods manufactured for 2007

  Discuss the major goals of the family

Discuss the major goals of the family and how would they go about achieving each goal. Specific to how they would achieve each goal

  Advise ms lyn about the nature of goodwill

Advise Ms Lyn about the nature of goodwill and how to account for it. Adelaide Ltd has acquired Happy Shoes manufacturing division from Leongatha Ltd.

  Prepare the entry to record the sales

Sheridan Company had cash sales of $69,978 (including taxes) for the month of June. Sales are subject to 9.00% sales tax. Prepare the entry to record the sales

  MA617 Forensic Accounting Assignment

MA617 Forensic Accounting Assignment Help and Solution, Melbourne Institute of Technology - Assessment Writing Service - Describe and explain the process

  Compute amount of gross profit to be recognized

Compute amount of gross profit to be recognized from the installment sale in 2009, 2010, 2011, 2012, and 2013 using point of delivery revenue recognition. Ignore interest charges.

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!

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