{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Chapter 12 Homework 3 - will both have improved profits 4...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 12 Case 35 1. Transfer price $8.25 + ($12.50 – $8.25) = $12.50 The electronics division must give up sales of $12.50 for every unit that they sell to the clock division so they should not sell the circuit boards for less than $12.50 2. Selling Price of Timing Device $70.00 -Cost of circuit board (12.50) -Variable Costs (55.75) Net effect on profit $ 6.75 Yes, because they will profit $6.75 more on every timing device sold. 3. Yes, they should be able to agree on a price between $12.50 and $19.25 because they
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: will both have improved profits. 4. The problem is that each divisional manager is more concerned with the profitability of their division than of the whole company. The two managers should sit down and should be able to agree on a transfer price that can benefit both of them. The president should facilitate a meeting between the two managers but should not force any agreement because he does not know the departments as well as the managers do....
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern