Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

Q1) This problem is exercise in transfer pricing. It is suitable to Airtex, Kyocera, North Country Auto and Sarnia.

Go to Birch Paper case.

http://www.uic.edu/classes/actg/actg326/CourseInformation/cases/birch.htm

Based on section on Transfer Pricing in reading Introduction to Responsibility Accounting Systems, there are three primary methods for transfer pricing. They are (i) cost, (ii) market price, (iii) negotiated. First, fill in  following table:
Southern
Division Thompson
Variable Costs/Ton

Market Price of Divisional Product
Excess Capacity (Yes or No)

All costs and market price entries in table above refer to costs and market prices of that division only, and do not include any transfer prices.

problems:

1. Determine minimum transfer price which Southern Division muts get for its product, suppose that it is operating at capacity?

2. Compute minimum transfer price that Southern Division must get for its product, suppose that it has significant excess capacity?

3. Suppose that Birch Paper adopts new transfer pricing policy, transferring at variable cost for Southern Division whenever it has excess capacity. Suppose that policy remains same for Thompson, transferring at market price. Compute profit will Thompson make if it "sells" (transfers) product to Northern at $430?

4. describe two significant potential problems with transfer pricing policy described in requirement 4.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M920926

Have any Question? 


Related Questions in Accounting Basics

Early morning on a bright day in mid-january 2009 james d

Early morning on a bright day in mid-January 2009, James D. White, CEO of Jamba Juice, was driving down highway 580 headed to Jamba Juice's Emeryville, California, headquarters. Unfortunately, today, White could not enjo ...

Answer the following questionduring 2012 nasa co produced a

Answer the following question. During 2012, NASA Co. produced a new line of computers that carry a three-year warranty against manufacturer's defects. Based on industry experience, NASA Co. estimated warranty costs at 1% ...

Consumers choices are prey to subtle discrepancies that

Consumers' choices are prey to subtle discrepancies that arise in cognitive accounting. Learning how and when you are prey to these discrepancies is an important step in improving your decision making. As the readings fo ...

To understand the accounting equation and its

To understand the accounting equation and its elements QUESTION Mr. "A" starts a new business. Before to start the business operation, he has purchased vehicle Rs. 1,500,000, office premises Rs. 3,000,000, stock of goods ...

Mcreath corporation is a leading producer of fresh frozen

McReath Corporation is a leading producer of fresh, frozen, and made from concentrate citrus drinks. The firm was founded in 1922 by Charles McReath, an army veteran who settled in Jacksonville, Florida, after World War ...

Forwards and options respond to each of the following

Forwards and Options Respond to each of the following questions (notice that there are main questions and sub-questions below some of the main questions - don't miss any!) 1. Suppose you enter into a long 6-month forward ...

Intercompany debt both long term and short term arises

Intercompany debt, both long term and short term, arises frequently. In some cases, intercorporate borrowings may arise because one affiliate can borrow at a cheaper rate than others, and lending to other affiliates may ...

This assignment will assess the following learning

This assignment will assess the following learning outcomes: - Demonstrate the impact on the financial statements and the implication for different users of accounts of alternative ways of treating controversial accounti ...

Exercise 1north company has completed all of its operating

Exercise 1 North Company has completed all of its operating budgets. The sales budget for the year shows 50,120 units and total sales of $2,128,200. The total unit cost of making one unit of sales is $22. Selling and adm ...

Accounting paper assignment start-up budgetingfor this

Accounting Paper Assignment: Start-up Budgeting For this assignment, you will decide what type of budget to implement for a start-up company. Write a three to four page paper in which you: 1. Summarize the type of manufa ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen