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

1 distinguish between construct and criterion-related

1. Distinguish between construct and criterion-related validity. 2. Distinguish between convergent and discriminant validity. Do these terms refer to types of construct validity or criterion-related validity?

What distinguishes an ordinary annuity from an annuity due

What distinguishes an ordinary annuity from an annuity due? What distinguishes an ordinary annuity from a deferred annuity? If a cash flow is the same amount each period, ad infinitum, how do we value the present value o ...

Straight supply is a major supplier of medical components

Straight Supply is a major supplier of medical components to large pharmaceutical corporations. Bonnie Straight is a second generation CEO of the company founded by her father forty years ago. Originally established in M ...

The centers for disease control and prevention released a

The Centers for Disease Control and Prevention released a report in 1998 that attributed part of the increase in youth smoking in the 1980s to the use of the cartoon character, Joe Camel, in cigarette advertising. Using ...

1 what is meant by an agency cost or agency problem do

1. What is meant by an "agency cost" or "agency problem"? Do these interfere with shareholder wealth maximization? Why? What mechanisms minimize these costs/problems? 2. Are ethics critical to the financial manager's goa ...

1 design an observational study of your own including the

1. Design an observational study of your own, including the creation of a set of behavioral categories that would be used to code for one or more variables of interest to you. Indicate the decisions that you have made re ...

What distinguishes the free cash flow of a firm from its

What distinguishes the free cash flow of a firm from its cash flow from operations? What is the relation between EBITDA and cash flow from operations? How can a negative free cash flow be considered good news? How can a ...

1 how would you define or describe the concept of culture2

1. How would you define or describe the concept of culture? 2. How is the research of Trompenaars similar to or different from that of Hofstede? 3. What do you consider to be the most important factors of culture in term ...

Internationalization of human resources at obirenowned for

Internationalization of human resources at OBI Renowned for its orange big box stores, OBI is one of the leading DIY/home improvement retail brands in Europe. Founded in Germany in 1970, the company currently operates ab ...

Carlinek is a polish company based in poznan which retails

Carlinek is a Polish company, based in Poznan, which retails Aqua-Floor, a well-known water-resistant laminated floor covering. The company needs to forecast the demand of this product, by using historical data on the sa ...

  • 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