Which division sets the maximum transfer price

Assignment Help Accounting Basics
Reference no: EM131697322

Question: Calculating Transfer Price Burt Inc. has a number of divisions, including the Indian Division, a producer of liquid pumps, and Maple Division, a manufacturer of boat engines. Indian Division produces the h20-model pump that can be used by Maple Division in the production of motors that regulate the raising and lowering of the boat engine's stern drive unit. The market price of the h20-model is $720, and the full cost of the h20-model is $540.

Required: 1. If Burt has a transfer pricing policy that requires transfer at full cost, what will the transfer price be? Do you suppose that Indian and Maple divisions will choose to transfer at that price?

2. If Burt has a transfer pricing policy that requires transfer at market price, what would the transfer price be? Do you suppose that Indian and Maple divisions would choose to transfer at that price?

3. Now suppose that Burt allows negotiated transfer pricing and that Indian Division can avoid $120 of selling expense by selling to Maple Division. Which division sets the minimum transfer price,and what is it? Which division sets the maximum transfer price, and what is it? Do you suppose that Indian and Maple divisions would choose to transfer somewhere in the bargaining range?

Reference no: EM131697322

Questions Cloud

Evaluate ubers csr efforts : Evaluate Uber's CSR efforts. Based on your research on Uber as well as various theories of CSR in Brusseau, do you think their CSR efforts are mostly hype?
Calculate the eva for east mullett manufacturing : Calculating Economic Value Added Refer to the information for East Mullett Manufacturing on the previous page. Total capital employed equaled $400,000.
Describe best business idea for this customer set : Develop a response that includes examples and evidence to support your ideas, and which clearly communicates the required message to your audience.
What is the current bond price : The bonds make annual payments. If the YTM on these bonds is 11 percent, what is the current bond price?
Which division sets the maximum transfer price : Which division sets the maximum transfer price, and what is it? Do you suppose that Indian and Maple divisions would choose to transfer.
What is an explication of a poem : What is an explication of a poem? It is a detailed explanation or interpretation. It discusses the poem's form (Sonnet? Quatrains? Free form?).
Percentage change in the price of bond dave : If interest rates suddenly rise by 3 percent, what is the percentage change in the price of Bond Dave? Enter the answer with 4 decimals (e.g. 0.0123).
What advice would you give to yourself : Watch the Ted Talk on a better way to talk about love. What advice would you give to yourself if you were able to give yourself advice as a teenager?
Why is non-programmed decision making an uncertain process : What is the difference between programmed and non-programmed decisions? Why is non-programmed decision making an uncertain process?

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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