Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

The commando motorcycle company has decided to become decentralized and split it's operations into two divisions. Motor and Assembly.Both divisions will be treated as investment centers. The motor division is currently operating at it's capacity of 30,000 motors per year

Direct Materials = $30
Direct Labor = 50
Variable Manufacturing Overhead = 20
Fixed Manufacturing Overhead = 25
Variable selling and administrative = 5
Fixed selling and administrative = 10
Total cost per motor = $140

Motor sells 10,000 of its motors to a snowmobile manufacturer and transfers the remaining 20,000 to the assembly division. The two divisions are currently in a debate over an approximate transfer price to charge for the 20,000 motors. Motor currently charges the snowmobile manufacturer $200 per motor. The final selling price of the motorcycles that Commando produces is $7200 per cycle. This selling price will not change regardless of the transfer price charged between the two divisions. Motor has no market for the 20,000 motors if they are not transferred to assembly. Variable selling and administrative costs are incurred on both internal and external sales.

What is the lowest acceptable transfer price from the viewpoint of the selling division? $35, $105, $125, or $140 per motor

Assume that the assembly division wants to also purchase the additional 10,000 motors that the motor division currently sells to the snowmobile manufacturer. What is the lowest acceptable transfer price for these additional motors from the viewpoint of the selling division?
$200, $105, $125, or $140 per motor

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M926428

Have any Question? 


Related Questions in Basic Finance

Suppose walmart is allowed to open a bank that accepts

Suppose Walmart is allowed to open a bank that accepts deposits and makes loans at its U.S. stores. a. How might this affect existing banks, especially community banks? b. In general, who might gain and who might lose if ...

International financial markets assignment-q1 you have 100

International Financial Markets Assignment- Q(1) You have 100% of your wealth in the U.S. stock market. You learned in MBA 796 that international diversifications often lead to a portfolio with better risk-return charact ...

1 what is the price of a 5-year bond with a nominal value

1. What is the price of a 5-year bond with a nominal value of $100, a yield to maturity of 7% (with annual compounding frequency), a 10% coupon rate and an annual coupon frequency? 2. Same question for a yield to maturit ...

Question 1nbsp a cost of living rider that you purchase as

QUESTION 1   A cost of living rider that you purchase as part of your insurance life insurance policy gives you the option to buy additional insurance coverage to compensate for inflation. True False QUESTION 2  Riders t ...

Five years ago laissez-faire recliners issued 10000000 of

Five years ago, Laissez-Faire Recliners issued $10,000,000 of corporate bonds with a 30-year maturity. The bonds have a coupon rate of 10.125%, pay interest semiannually, and have a par value of $1,000 per bond. The bond ...

Suppose you are a senior fund manager with a large

Suppose you are a senior fund manager with a large investment company. You are a proponent of the Efficient Market Hypothesis (EMH) and you are an advocate of the use of the Capital Asset Pricing Model (CAPM), the single ...

Interpreting the feds monetary policy when the fed

Interpreting the Fed's Monetary Policy: When the Fed increases the money supply to lower the federal funds rate, will the cost of capital to U.S. companies be reduced? Explain how the segmented markets theory regarding t ...

Questions-part 1 company financialsthrough 20142016

Questions- Part 1: Company financials Through 2014.2016 financial performance of Qantas has seen a major turnaround (refer to Source 1, 2 and 3). a) On Page 24 of the 2016 Preliminary Final Report shows a Return on Inves ...

Questionhypothesis testing for two populationscaption labor

Question: Hypothesis Testing for Two Populations Caption : Labor negotiations have reared their ugly head again! TNH Industry Human Resources department is concerned about the perception of the hours worked per week at t ...

An insurance company has determined that the number of

An insurance company has determined that the number of motor insurance claims per customer per year has the following probability distribution: No. of claims (x) 0 1 2 3 4 >4 P(x) ? 0.24 0.11 0.03 0.01 0 (a)   What is th ...

  • 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

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate