Should transfers be made

Assignment Help Managerial Accounting
Reference no: EM13513701

1. The Caplow Company is a multidivisional company, and its managers have been delegated full profit responsibility and complex autonomy to accept or reject transfers from other divisions. Division A produces a subassembly with a ready competitive market. This subassembly is currently used by Division B for a final product that is sold outside at $1,200.Division A charges Division B market price for the subassembly, which is $700 per unit. Variable costs are $520 and $600 for Divisions A and B, respectively. The manager of Division B feels that Division A should transfer the subassembly at a lower price than market because at this price, Division B is unable to make a profit.

1. Compute Division B's profit contribution if transfers are made at the market price, and also the total contribution to profit for the company.

2. Assume that Division A can sell all its production in the open market. Should Division A transfer goods to Division B? If so, at what price?

3. Assume that Division A can sell in the open market only 500 units at $700 per unit out of the 1,000 units that it can produce every month, and that a 20 percent reduction in price is necessary to sell full capacity. Should transfers be made? If so, how many units should it transfer and at what price? Submit a schedule showing comparisons of contribution margins under three different alternatives to support your decision.

Reference no: EM13513701

Questions Cloud

Find its kinetic energy and speed when it lands on ground : A child throws a stone from the top of a 15 m cliff with a speed of 20 m/s. If the stone weights 2 N, find its kinetic energy and speed when it lands on the ground
State the maximum number of electrons in an atom : What is the maximum number of electrons in an atom whose highest-energy electrons have the principal quantum number n=5
Prepare the adjusting journal entries as of august : Bryant is trying to prepare monthly financial statements. Below is some information related to unrecorded expenses that the business incurred during August.
What is the maximum voltage that should be applied across it : A 200 ohm resistor is rated at 1/4 W. What is the maximum voltage that should be applied across it
Should transfers be made : Should transfers be made? If so, how many units should it transfer and at what price? Submit a schedule showing comparisons of contribution margins under three different alternatives to support your decision.
Explain specific heat and density of the resulting solution : Assume that the specific heat and density of the resulting solution are equal to those of water [4.18 J/ g.C and 1.00 g/mL ] and that no heat is lost to the calorimeter itself, nor to the surroundings.
Find at what angle above the horizon does the friend see sun : A submerged scuba diver looks up toward the calm surface of a freshwater lake and notes that the Sun appears to be 32 degrees from the vertical. At what angle above the horizon does the friend see the sun
Prepare explanations for each journal entry : From an analysis of the T-accounts, reconstruct the October transaction entries, and the adjusting journal entries that were made on October 31, 2012. Prepare explanations for each journal entry.
Describe the mass of the object lifted in kilograms : Assume that the energy used to climb steps is the same as the energy required to lift a mass against the force of gravity, namely: PE = mgh, where m is the mass of the object lifted in kilograms, g is the gravitational constant (9.8 m/s2), and h i..

Reviews

Write a Review

Managerial Accounting Questions & Answers

  Determine the profitability of souvenir program production

The State Opera Theatre gains significant revenue from ticket sales at each opera performed during the season. The sale of souvenir programs for all performances of each opera also adds to profitability.

  Managerial accounting hw help i just need help not someone

i just need help not someone to do it for me. i have attached the

  Allocating joint costs of products

Joint costs should not be allocated to individual products for decision purposes. For what purposes are such costs allocated to products?

  Webb corp sponsors a described benefit pension plan for its

webb corp. sponsors a described benefit pension plan for its employees. on 1st january 2012 the subsequent balances

  Develop an executive summary

Develop an executive summary of your findings in a Microsoft PowerPoint presentation format to present to Executive Management.

  Compute total costs-flexible budget

A graph of a flexible budget formula reflects fixed costs of $30,000 and total costs of $90,000 at a volume of 6,000 units. Assuming the relevant range is 1,000 to 12,000 units, the graph would reflect total costs at 10,000 units of what dollar am..

  Sales to earn expected profit on proposed investment

From the books of Aggarwal Bors, the following information have been extracted: Rs. Sales 2,40,000 Variable costs 1,44,000 Fixed costs 26,000 Profit before tax 70,000 Rate of tax 40% The firm is proposing to buy a new plant which can generate additio..

  Question on cvp analysis

Compute the annual breakeven point in dollar and in unit sales for shop 48? Make a CVP graph showing cost and revenue data for shop 48 from zero level activity up to 17,000 pairs of shoes sold in year, what would be shop 48's net operating income o..

  Why does management accounting provide information

why does management accounting provide information to the internal users only?

  Consider there is a well-financed one-year-old company in

consider there is a well-financed one-year-old company in the biotech industry that is concentrating on developing

  Prepare variance analysis report

Strauss Table Company manufactures tables for schools. The 20x4 operating budget is based upon sales of 20,000 units at $ 100 per table.

  Direct manufacturing labour cost budget

Production budget in units and direct material usage budget and direct material purchases budget, direct manufacturing labour cost budget

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