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

Imagine that your town or city has increased its nighttime

Imagine that your town or city has increased its nighttime police patrols to reduce crime. Design two quasi-experiments to determine whether this intervention has been effective, one that uses some variation of a nonequi ...

What is meant by break even drivers identify two important

What is meant by break even drivers? Identify two important drivers affecting the amount of revenues needed for ventures to break even Explain

Problem -the balance sheet of perseverance corporation on

Problem - The balance sheet of PERSEVERANCE CORPORATION on December 31, 2005, includes the following cash and receivable balances: Cash - Davao Bank   P 45,000 Currency and coins   16,000 Petty cash fund   1,000 Cash in ...

A project is expected to create operating cash flows of

A project is expected to create operating cash flows of $29,000 a year for three years. The initial cost of the fixed assets is $60,000. These assets will be worthless at the end of the project. An additional $4,000 of n ...

In randomized double-blind clinical trials of a new vaccine

In randomized, double-blind clinical trials of a new vaccine, monkeysmonkeys were randomly divided into two groups. Subjects in group 1 received the new vaccine while subjects in group 2 received a control vaccine. After ...

1 what is a capitalization rate what are the different ways

1. What is a capitalization rate? What are the different ways of arriving at this rate for an appraisal? 2. If investors buy properties based on expected future benefits, what is the rationale for appraising a property b ...

1 what is the logic of the percentage-of-sales method for

1. What is the logic of the percentage-of-sales method for constructing pro forma financial statements? On a year-to-year basis, which balance sheet and income statement items do you think will fluctuate most closely wit ...

A random sample of the birth weights of 186 babies has a

A random sample of the birth weights of 186 babies has a mean of 3103 g and a standard deviation of 691 g. Construct a 98% confidence interval estimate of the mean birth weight for all such babies. What is the confidence ...

1nbspcalculate the cost of new common equity financing of

1. Calculate the cost of new common equity financing of stock R using Gordon Model Round the answers to two decimal places in percentage form (Write the percentage sign in the "units" box) Last Year Dividend Growth Rate ...

Research the property you selected in your local real

Research the property you selected in your Local Real Estate Opportunities activity. Using the newspaper listing from your exploration, either go online to the real estate agency that is listing the property or contact t ...

  • 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

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

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