Explain and calculate the transfer prices

Assignment Help Accounting Basics
Reference no: EM133069523

Question - Still Love Enterprise produces and sells old hits records players and has two divisions, Hit and Miss. Currently the Miss Division buys a part from the Hit Division for $984. The Hit Division wants to increase the price of the part it sells to the Miss Division to $1,200, which is the price it charges customers outside the group. The cost data for the Hit Division is as follows:

Direct materials $306

Direct labour $390

Variable overhead $270

Fixed overhead $115

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

(a) Hit Division has an external market for its entire product.

(b) Hit Division has excess capacity to supply all parts needed by the Miss Division.

(c) Hit Division has excess capacity for only 3,000 of the total 10,000 parts needed by the Miss Division. However, the Hit Division has an alternative use for this excess capacity which equates to a contribution of $60 for each part.

(d) Explain two objectives of transfer pricing systems.

Reference no: EM133069523

Questions Cloud

What is the beta of portfolio : What is the beta of your portfolio? If you expect the market to earn 10 percent aand the risk-free rate is 2.5 percent, what is the required return of the portf
What is the amount of the net income : A total asset turnover of 1.40, and a profit margin of 8.8 %. The total equity is $672,500. What is the amount of the net income
How much does the call center save on every future order : Suppose one customer agrees to have her credit card information saved. How much does the call center save on every future order of this customer
Have you ever purchased something from a different country : Share a time when you or someone you know was involved in a currency exchange transaction. Provide the situation and the risks involved.
Explain and calculate the transfer prices : Explain and calculate the transfer prices at which the Hit Division should offer to transfer the part to the Miss Division
Explain the key participants of international business trade : Explain why it is necessary to have a financial integration. Use major blocs in one region to illustrate your points or objectives.
Find the possible values of the stock : Consider a binomial model with u = 1.2,d = 0.8 and periodic interest rate r=0.1. Suppose that S=10attimet=0.
What is the impact on us mnc competitiveness : What is the impact on US MNC competitiveness and relative purchasing power of US consumers if and when R(t) > 1?
How much is cost of the new asset of julia : On July 1, 2021, JULIA exchanged its non-monetary asset (equipment) with GERALD's non-monetary asset (machinery). How much is cost of the new asset of JULIA

Reviews

Write a Review

Accounting Basics Questions & Answers

  What is the projects MIRR

If the Present Value of all estimated futures costs of a 5 year new investment project is 960, What is the projects MIRR

  What amount is basic earnings per share for the year ended

A company had the following outstanding shares as of January 1, year 2: What amount is basic earnings per share for the year ended December 31, year 2

  What is the flexible budget variance for setup costs

Leshan Company planned to produce 12,000 units. Actual setup cost was $26,000. What is the flexible budget variance for setup costs

  Calculate price index

John's Televisions produces television sets in three categories: portable, midsize, and flat-screen. Calculate price index

  Determine the net pay for the week

An employee earns $40 per hour and 1.75 times that rate for all hours in excess of 40 hours per week. Assume that the employee worked 60 hours during the week.

  Determine the correct amount of consolidated net income

Land P200,000, P240,000 and P300,000 for 2021, 2022, and 2023 respectively. Determine the correct amount of consolidated net income for 2023

  You need to present to your client alice cartwright some

you need to present to your client alice cartwright some investment options for her to choose from. her choices are

  What amount of colmars encumbrances were outstanding

Colmar paid $7,000,000 of the invoices received during the year. What amount of Colmar's encumbrances were outstanding at December 31, 2019

  Health policies-the future of health care in the u.s.

Based on the changing environment, as well as demographics in 21st Century America, there are many burgeoning issues and hurdles the U.S. Health Care System faces. As part of the preparation for your assignment, view the video titled "Health Care ..

  Graders in unorganized activities

On the average, how many student-days elapse between injuries to fourth to sixth graders in unorganized activities at school, and what is the probability that the next such injury will occur before 45 thousand student-days have passed?

  What should Amlin report as total contributed capital

What should Amlin report as total contributed capital on its December 31, 2019, balance sheet issued on February 1, 2020

  Compute the revenue to be recognized in fiscal year

Compute the revenue to be recognized in fiscal year 2008 for the two operating divisions of Simona Amanar Industries in accordance with generally accepted accounting principles.

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