Us pump is multidivisional firm tha manufactures and

Reference no: EM13600057

U.S. pump is multidivisional firm tha manufactures and installs chemical piping and pump systmes. The valve division makes a single standardized valve. Last year half of the valve divisions output was sold to the installations division for $40 and the remaining half was sold to outsiders for $60. The existing transfer price has been set at $40/pump through a process of negotiation bet the two divisions with involvement of sr mngt. The installation div has rcvd a bid frm an outside valve manufacturer to supply it w/ an equivalent valve for $35 each. The mgr. of the valve div argued that if it is forced to mee the xternal prize $34 it will lose money on selling internally. Last years operating sstatement:
To Installation Div To Outside

sales 10,000@$40 $800,000 20,000@$60 $1,200,000
variable cost 20,000@$30 (600,000) (600,000)
Allocated fixe cost (135,000) (135,000)
Gross margin $65,000 $ 465,000

Analyze the situation and recommend a course of action. What shld installation div managers do? What shld valve div do? What shld u.s. pump's senior mnagers do?

Reference no: EM13600057

Questions Cloud

Membership rose 3 during year 9 approximately the same : membership rose 3 during year 9 approximately the same annual rate of increase the club has experienced sinced it open

Lake co receives nonrefundable advance payments with : lake co. receives nonrefundable advance payments with special orders for containers constructed to customer

When only two treatments are involved anova and the student : when only two treatments are involved anova and the student t test chapter 11 result in the same conclusions. also . as

The city of mirada wants to offer cable television to its : the city of mirada wants to offer cable television to its residents in 2009. the city has approached a company called

Us pump is multidivisional firm tha manufactures and : u.s. pump is multidivisional firm tha manufactures and installs chemical piping and pump systmes. the valve division

Calculate cost of goods sold and ending inventory under the : sales 1600 units beginning inventory 500 units 4 purchases in chronilogical order 600 units 5 800 units 6 400 units 8

The city of mirada wants to offer cable television to its : the city of mirada wants to offer cable television to its residents in 2009. the city has approached a company called

Mares enterprises applies overhead using direct labor hours : mares enterprises applies overhead using direct labor hours. expected direct labor hours - 600000 actual direct labor

Explain the characteristics of integer programming : explain the characteristics of integer programming problems.give specific instances in which you would use an integer

User Account

All Pages