s Carol Components operates a Production Division and a Packaging Division. Both divisions are evaluated as profit centers. Packagingbuys components from Production and assembles them for sale. Production sells many components to third parties in addition toPackaging. Selected data from the two operations follow:Capacity (units)Sales priceVariable costsbFixed costsProduction50,800$ 256$ 112,$ 30,000,000Packaging25,400$ 796a For Production, this is the price to third parties.For Packaging, this does not include the transfer price paid to Production.a. Optimal transfer priceb. Transfer pricec. Transfer price$ 304$ 18,000,000:Required:a. Current output in Production is 25,400 units. Packaging requests an additional 6,280 units to produce a special order. What transferprice would you recommend?b. Suppose Production is operating at full capacity. What transfer price would you recommend?c. Suppose Production is operating at 47,660 units. What transfer price would you recommend?per unitper unitper unitin !!!

Transfer price methodology are the methods or techniques which are used for determining prices for…

Carol Components operates a Production Division and a Packaging Division. Both divisions are evaluated as profit centers. Packaging buys components from Production and assembles them for sale. Production sells many components to third parties in addition to Packaging. Selected data from the two operations follow: Capacity (units) Sales price Variable costs Fixed costs Production 50,800 $ 256 $ 112 $ 30,000,000 For Production, this is the price to third parties. bFor Packaging, this does not include the transfer price paid to Production. Packaging 25,400 $ 796 $ 304 $ 18,000,000 Required: a. Current output in Production is 25,400 units. Packaging requests an additional 6,280 units to produce a special order. What transfer price would you recommend? a. Optimal transfer price b. Transfer price c. Transfer price b. Suppose Production is operating at full capacity. What transfer price would you recommend? c. Suppose Production is operating at 47,660 units. What transfer price would you recommend? per unit per unit per unit

Carol Components operates a Production Division and a Packaging Division. Both divisions are evaluated as profit centers. Packaging buys components from Production and assembles them for sale. Production sells many components to third parties in addition to Packaging. Selected data from the two operations follow: Capacity (units) Sales price Variable costs Fixed costs Production 50,800 $ 256 $ 112 $ 30,000,000 For Production, this is the price to third parties. bFor Packaging, this does not include the transfer price paid to Production. Packaging 25,400 $ 796 $ 304 $ 18,000,000 Required: a. Current output in Production is 25,400 units. Packaging requests an additional 6,280 units to produce a special order. What transfer price would you recommend? a. Optimal transfer price b. Transfer price c. Transfer price b. Suppose Production is operating at full capacity. What transfer price would you recommend? c. Suppose Production is operating at 47,660 units. What transfer price would you recommend? per unit per unit per unit

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 16E

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