Determine the divisional and company net income

Assignment Help Accounting Basics

Reference no: EM13154111

Ryan Company that has two divisions M & N. Product X is manufactured in US and sold domestically and to division N in France as well. A total of 900 units of X is produced and sold at $410 a unit in the U.S. Division N requires 300 units of X. Ryan Company has a total capacity of 1200 units. The company estimates the cost to be $190 in variable costs per unit with a total fixed cost of $72,000. Selling and administration expense in the U.S. comes to $90,000 including sales commissions at 5% of domestic sales. Shipping cost to N (payable by N) amounts to $3,600. Division N packages the item and puts a label on it at a cost of $32 a unit and sells it for $560 a unit. It incurs a promotional and administrative cost amounting to $15,000. The income tax rate in the U.S. is 30% and it is 50% in France.

Required:

a) Determine the divisional and company net income if the transfer price is set at the market price.

b) Determine the divisional and company net income if the transfer price is set at total cost.

c) Determine the divisional and company net income if the transfer price is set at variable cost.

d) Would it be to the company's advantage to buy from an outsider rather than produce N's requirement if an outsider can sell the item to N for $220 a unit? Show your computations.

Reference no: EM13154111

Questions Cloud

What is the opportunity cost of tammies trip : The cost of the concert ticket is $50. What is the opportunity cost of Tammie's trip to the concert and the monthly productivity of two workers is as follow: Alex 300 Pants & 100 bikes and Joel 100 pants & 50 bikes.

Calculate the mass of ice : Consider a glass of 262 mL of water at 28°C. Calculate the mass of ice at -15°C that must be added to cool the water to 10°C after thermal equilibrium is achieved.

Explain what is wrong when statistician survey voters : Next morning, he came to work at 8:00 and began to make calls. By 11:00 a.m., his survey was done. Don't discuss what is not said. Discuss what is wrong with what is said.

Stock value by using capital asset pricing model : An investor is looking to buy stock in Company XYZ. The earnings in the last year were $9.50 a share and expected to grow 3% a year for the upcoming 5 years. The current return on benchmark investments is 11%. Using the Capital Asset Pricing Model..

Determine the divisional and company net income : Determine the divisional and company net income if the transfer price is set at the market price. Determine the divisional and company net income if the transfer price is set at total cost. Determine the divisional and company net income if the trans..

Mass of limestone is required to remove the sulfur dioxide : what mass of limestone is required to remove all the sulfur dioxide formed by the combustion of 7.5 104 kg of coal that is 0.33 mass % sulfur?

Does this hurt the growth in the economy? : Assuming a company does not have enough excess retained earnings to fund future projects that have positive NPV's, they would have to sell debt or issue new capital. Issuing new capital is often thought of as a negative sign to current stock holders,..

General types of subsequent events : What are the general types of subsequent events that require Green's consideration and evaluation? What are the auditing procedures Green should consider performing to gather evidence concerning subsequent events?

Maximum regular cost recovery deduction : Omar acquires used 7-year personal property for $100,000 to use in his business in February 2010. Omar does not elect §179 expensing or additional first-year depreciation, but does take the maximum regular cost recovery deduction. As a result, Oma..

User Account

All Pages