from the following data Fabrication Division Market price of subassembly P50

From the following data fabrication division market

This preview shows page 5 - 6 out of 10 pages.

from the following data:Fabrication DivisionMarket price of subassemblyP50Variable cost of subassemblyP20Excess capacity (in units)1,000Assembling DivisionNumber of units needed900What is the natural bargaining range for the two divisions?Minimum transfer price3.Family Enterprises has two divisions: Davy and Johnny. Davy Division has a capacity to produce2,000 units and is expecting to sell 1,500 units. Johnny Division wants to purchase 100 units of aproduct Davy produces. Davy sells the product at a selling price of P100 per unit, the variable costper unit is P25 and the fixed costs total P30,000. The minimum transfer price that Davy will acceptis?4.Assume that Division X has a product that can be sold either to outside customers on an intermediatemarket or to Division Y of the same company for use in its production process. The managers of thedivision are evaluated based on their divisional profits.Division X:Capacity in units200,000Number of units being sold on the intermediate market160,000Selling price per unit on the intermediate marketP75Variables costs per unit60Fixed costs per unit (based on capacity)8Division Y:Number of units needed for production40,000Purchase price per unit now being paid to an outside supplier P74The minimum transfer price to be charged by the Division X should be:Effect on profit of make decision5.Bearing Division of Phantom Corp. sells 80,000 units of Part X to the outside market. Part X sellsfor P10.00 and has a variable cost of P5.50 and a fixed cost per unit of P2.50. Bearing has a capacityto produce 100,000 units per period. Motor Division currently purchases 10,000 units of Part Xfrom Bearing for P10.00. Motor has been approached by an outside supplier willing to supply theparts for P9.00. What is the effect on XYZ’s overall profit if Bearing refuses the outside price andMotor decides to buy outside?6.Bearing Division of XYZ Corp. sells 80,000 units of Part X to the outside market. Part X sells forP10.00 and has a variable cost of P5.50 and a fixed cost per unit of P2.50. Bearing has a capacity toproduce 100,000 units per period. Motor Division currently purchases 10,000 units of Part X fromBearing for P10.00. Motor has been approached by an outside supplier willing to supply the partsfor P9.00. What is the effect on XYZ’s overall profit if Bearing refuses the outside price and Motor

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture