User Account

All Pages

Transfer price policy to implement

Assignment Help Managerial Accounting
Reference no: EM13876680

Oriole, Inc. is a large consumer Products Company, which manufactures health and beauty products sold at grocery and drug stores throughout the country. One division, PS, does both manufacturing and shipping and operates a warehouse and transportation activity in a central location. Division PS loads trucks with products and ships the products using third party trucking companies to its regional distribution centers. Oriole recently started a new enterprise, Division CO, which would focus on logistics alone, providing transportation services to both other Oriole divisions and third parties. The manager of Division CO proposes using the warehouse facility of Division PS, at least to start. Employees of Division PS would load the trucks for the Division CO business as well as the Division PS business. All divisions at Oriole are treated as profit centers with managers evaluated on division profit. The best estimates of the current activity and costs of Division PS follow:

Division PS
Capacity (containers) . . . . . . . . . . . . . . . 10,000
Division PS activity (containers) . . . . . . 6,000
Variable costs (per container) . . . . . . . . $4
Fixed costs . . . . . . . . . . . . . . . . . . . . . . . $200,000

Required:
a. The current activity estimated for Division CO is 2,000 cases. The company has asked you to recommend a transfer price policy to implement. What transfer price would you recommend? Why? 
b. How would the division manager for Division PS likely respond? How would you answer? 
c. Another manager has identified another opportunity and also proposes using the Division PS facility. Estimated activity for this third division is expected to be 3,000 cases. How would you modify, if at all, your recommendation in part (a)?

Reference no: EM13876680

Questions Cloud

Update on the progress of the project to plan : The Board of Directors has requested an update on the progress of the project to plan, organize, and deliver the Annual Convention. As part of this update, they would like to be provided with all the supporting documents that contain data used in ..
Calculate the model''s multipliers in the question : Assume the central bank of the economy described in the last problem expands the money supply and manages to reduce the interest rate to 3.2 %. Determine the new equilibrium values of the endogenous variables.
What government policies seem to be the most innovative : What government policies seem to be the most innovative? Most effective at achiev- ing sustainability goals? Identify the stakeholders in the government subsidy context. Who bene?ts, and who is harmed?
Compute the fixed overhead flexible-budget variance : Compute the fixed overhead flexible-budget variance. Provide appropriate journal entries to record the fixed overhead spending and fixed overhead production- volume variances for March.
Transfer price policy to implement : Oriole, Inc. is a large consumer Products Company, which manufactures health and beauty products sold at grocery and drug stores throughout the country. One division, PS, does both manufacturing and shipping and operates a warehouse and transportatio..
Determine the length : The homogeneous wire ABCD is bent as shown and is attached to a hinge at C. Determine the length L for which the portion BCD of the wire is horizontal.
What reduction in greenhouse gas emissions takes place : What reduction in greenhouse gas emissions takes place when people choose an urban, as opposed to an ex- urban, lifestyle?
Compute the flexible-budget variance and spending variance : Compute the flexible-budget variance, the spending variance, and the efficiency variance for variable overhead for March. Provide appropriate journal entries to record the variable overhead spending and efficiency variances.
Determine the model''s government expen- diture multiplier : Write the model in matrix form and determine the equilibrium values of national income, consumption, investment, and tax.

Reviews

Write a Review

Managerial Accounting Questions & Answers

  Determining cost volume profit analysis

Factors which must be taken in account when making decisions regarding price, such as any change in risk involved in cost-volume-profit structure; the link between short- and long-run prices

  Calculate the joint product cost

Products Gamma and Delta are joint products. The joint production cost of the products is $800. Gamma has a market value of $500 at the split-off point.

  Concept of sunk cost and opportunity cost

Calculate the no. of package tours that must be sold to break even and calculate the revenue needed to earn a target operating income

  Trinco ltd trinidad amp tobago-tampt has been negotiating a

trinco ltd trinidad amp tobago-tampt has been negotiating a contract with a potential customer in jamaica. before the

  Classify all manufacturing costs and selling

What types of capital budgeting factors would you look at when deciding whether to do this? What would be the relevant costs that you would consider in this decision?

  Define manufacturing overhead

Explain why the increase in the overhead rate should not have a negative financial impact on Borealis Manufacturing and explain how Borealis Manufacturing could change its overhead application system to eliminate confusion over product costs.

  What was indiana corporations net operating income

Callaham Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $115.80 per unit.

  Qcrsl is continuing to re-evaluate all aspects of the

q.crsl is continuing to re-evaluate all aspects of the business and would like you to look into staffing costs. below

  Corporate accounting please find the attachment solution

please find the attachment.. solution must be base on the info. provided in an attachment please dont

  Classification of cost what are the ways in which cost be

what are the ways in which cost be be classified to suit management needs.give examples of the

  Analysis of misinformation in management

Now, you need to fast-forward to the present. After reading the case, craft your own version of misinformation in management by developing five (5) key incorrect assumptions that management makes about its accounting information systems.

  Develop a value chain for the airline industry

Develop a value chain for the airline industry

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: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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