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 write your point of view about the concept of risk and

1. Write your point of view about the concept of risk and return. Do you think they are related? What is the relationship, why is there one and how are they related? 2. In your opinion why should financial decision maker ...

1 compare and contrast a performance cycle node and a link

1. Compare and contrast a performance cycle node and a link. Give an example of each. 2. How does the "quest for quality" affect logistical operations? Does the concept of total quality have relevancy when applied to log ...

Imagine that you have collected the following set of iq

Imagine that you have collected the following set of IQ scores: a . Construct a simple frequency distribution of these scores. b. Construct a grouped frequency distribution of these scores that includes both frequencies ...

1 develop at least three behavioral measures of each of the

1. Develop at least three behavioral measures of each of the following conceptual variables. Consider measures that are based on frequency, speed, duration, latency, and intensity. Consider the extent to which each of th ...

If the binomial model produces a call option price that is

If the binomial model produces a call option price that is higher than the price at which the option is trading in the market, what strategy is suggested? Discuss how a binomial model accommodates the possibility of earl ...

If the initial margin for one contract of crude oil was

If the initial margin for one contract of crude oil was $1,000 and the maintenance level was $800, how far would prices need to move against the position in order to trigger a margin call? (Assume only $1,000 on deposit. ...

1 what are positive and negative financial leverage how are

1. What are positive and negative financial leverage? How are returns or losses magnified as the degree of leverage increases? How does leverage on a before-tax basis differ from leverage on an after-tax basis? 2. In wha ...

1 what are the major strategic differences between

1. What are the major strategic differences between marketing domestically and marketing internationally? 2. Discuss the importance of marketing research for international marketing. What challenges face marketing resear ...

Consider a projects incremental cash flows in order -700

Consider a project's incremental cash flows in order: -$700, $400, $300, $400. Assume a cost of capital of 7%. How does the NPV that you get by using Excel's NPV function all by itself compare to the correct NPV for this ...

1 how would stephanies money management decisions be

1. How would Stephanie's money management decisions be different if she were a single mother of two children? 2. How would Stephanie's money management decisions be affected if she were 35 years old? If she were 50 years ...

  • 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