Reference no: EM131914704
Problem - Silicone Valley Products has several manufacturing divisions. The Palo Alto Division produces a component part that is used in the manufacture of electronic equipment. The cost per part for July is as follows:
Variable cost.....$90
Fixed cost (at 2,000 units per month capacity).....60
Total cost per part.....$150
Some of Alto Palo's division's output is sold to outside manufacturers, and some is sold internally to the Berkeley Division. The price per part is $200. The Berkeley Division's cost and revenue structure follow.
Selling price per unit....$1000
Less variable cost per unit
Cost of parts from the palo alto division...$200
Other variable costs.....................................$.400 $600
Contribution margin per unit................................................$400
Less fixed costs per unit (at 200 units per month).............(100)
Net income per unit..................................................................$300
The Berkeley Division received a one time order for 10 units. The buyer wants to pay only $500 per unit.
REQUIRED
a. From the perspective of the Berkeley Division, should the $500 price be accepted? Explain.
b. If both divisions have excess capacity, would the Berkeley Division's action benefit the company as a whole? Explain.
c. If the Berkeley Division has excess capacity but the Palo Alto Division does not and can sell all of its parts to outside manufacturers, what would be the advantage or disadvantage of accepting the ten-unit order at the $500 price to the berekely Division?
d. To make a decision that is in the best interest of the company, what transfer pricing information does the Berkeley Division need?
|
What constitutional challenge was raised by the plaintiffs
: An individual and a group applied to the Chicago Park District for permits to hold rallies advocating the legalization of marijuana.
|
|
Compute annual after tax cash flows related to CAD Project
: The proposed system is expected to save 10,000 design hours per year; Compute the annual after tax cash flows related to the CAD Project
|
|
Briefly explain how information systems are important
: COIT20274 - Information Systems for Business Professionals - define what information systems are and briefly explain how information systems are important
|
|
Read the press release for the study
: Read the press release for the study and explain how U.S. tort costs compare with other nations and why high tort costs matter, according to the study.
|
|
What transfer pricing information berkeley division need
: To make a decision that is in the best interest of the company, what transfer pricing information does the Berkeley Division need
|
|
Importance of social security benefits
: Have to analyze the importance of Social Security benefits (retirement income, life insurance, disability income and Medicare).
|
|
What was cotillo cause of action
: Cotillo, a power lifter with 10 years experience, attempted to lift 530 pounds during an American Powerlifting Association-sponsored meet, organized by Duncan.
|
|
What types of deductions mr gerbeuses be rightly entitled to
: What types of deductions/expenses might Mr. Gerbeuses be rightly entitled to; what types of deductions/expenses may provide opportunity for abuse?
|
|
Determine the effect on ROI of accepting new product line
: Operating assets for the Commercial Division currently average $2,500,000. Determine the effect on ROI of accepting the new product line
|