Solution-Determine how negotiation buying units may be used

Determine how negotiation buying units may be used

Assignment Help Managerial Accounting

Reference no: EM132558916

Spark Ltd has two divisions, assembly and electrical. The assembly division transfers partially completed components to the electrical division at a predetermined transfer price. The assembly division's standard variable production cost per unit is $550. This division has spare capacity, and it could sell all its components to outside buyers at $680 per unit in a perfectly competitive market.

Question a) Determine a transfer price using the general rule.

Question b) How would the transfer price change if the assembly division had no spare capacity?

Question c) What transfer price would you recommend if there was no outside market for the transferred component and the assembly division had spare capacity?

Question d) Explain how negotiation between the supplying and buying units may be used to set transfer prices. How does this relate to the general transfer pricing rule?

Reference no: EM132558916

Questions Cloud

Benefits and challenges of agile project management : What are benefits and challenges of Agile Project Management? How can Agile Project Management be used in other domains?

How to prepare a differential analysis report : Grey Inc., How to Prepare a differential analysis report, dated March 12 of the current year, on the decision to make or buy Part Z.

Development and use of information systems : We discuss each of the different roles that people play in the design, development and use of information systems.

Demonstrate what company net profit for the previous year : Demonstrate What was the company's net profit for the previous year? What will the new break-even point be if fixed costs increase by 10 per cent?

Determine how negotiation buying units may be used : Determine how negotiation between the supplying and buying units may be used to set transfer prices. How does this relate to the general transfer pricing rule?

People play in the design-development : We discuss each of the different roles that people play in the design, development, and use of information systems.

Find and discuss standard costing system : Find and Discuss two advantages and two disadvantages of a standard costing system in which the standard direct labour rates per hour are not changed.

Humans and technology interact in all information systems : It is important to understand that humans and technology interact in all information systems.

Ideas for new offerings from broad reach sailing : Create some ideas for new offerings from Broad Reach Sailing. Decide if it makes sense to take on new partners and what the pros and cons

User Account

All Pages

Determine how negotiation buying units may be used

Reference no: EM132558916

Reference no: EM132558916

Questions Cloud

Reviews

Write a Review

Managerial Accounting Questions & Answers

Manage budgets and financial plans

Prepare a retained earnings statement

Prepare a master budget for the three-month period

Construct the companys direct labor budget

Evaluate the predetermined overhead rate

Determine the company''s bid

Compute the pool rates for the different activities

Prepare Company financial statements

Prepare an analysis of terracycles

Discuss the ethical issues

Political resources in emerging markets

Management accounting - ehsan electronics company

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT