Maurice Tutor

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About Maurice Tutor

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Expertise:
Algebra,Applied Sciences See all
Algebra,Applied Sciences,Biology,Calculus,Chemistry,Economics,English,Essay writing,Geography,Geology,Health & Medical,Physics,Science Hide all
Teaching Since: May 2017
Last Sign in: 401 Weeks Ago, 4 Days Ago
Questions Answered: 66690
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Education

  • MCS,PHD
    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

Experience

  • Professor
    Phoniex University
    Oct-2001 - Nov-2016

Category > Accounting Posted 24 Aug 2017 My Price 14.00

Paper Division of Edu-Tech, Inc.

The Paper Division of Edu-Tech, Inc., produces photographic paper that can be sold externally or internally to Edu-Tech’s School Photography Division. Sales and cost data per package of photographic paper follow:

 

LO5

Unit selling price

$3.95

 

Unit variable product cost

$2.25

 

Unit product fixed cost*

Practical capacity

$1.20

500,000 units

 

*$600,000/500,000

 

 

 

 

 

 

 

During the coming year, the Paper Division expects to sell 350,000 packages of photographic paper. The School Photography Division currently plans to buy 150,000 packages of this paper on the outside market for $3.95 each. Penelope

Montenegro, manager of the Paper Division, has approached Tom Holmes, manager of the School Photography Division, and offered to sell the 150,000 packages of paper for $3.75 each. Penelope explained to Tom that she can avoid selling costs of

$0.40 per package and that she would split the savings by offering a $0.20 discount on the usual price.

 

Required

1.    What is the minimum transfer price that the Paper Division would be willing to accept? What is the maximum transfer price that the School Photography Divi- sion would be willing to pay? Should an internal transfer take place? What would be the benefit (or loss) to the firm as a whole if the internal transfer takes place?

2.    Suppose Tom knows that the Paper Division has idle capacity. Do you think that he would agree to the transfer price of $3.75? Suppose he counters with an offer to pay $3.20. If you were Penelope, would you be interested in this price? Explain with supporting computations.

3.    Suppose that Edu-Tech, Inc.’s policy is that all internal transfers take place at full manufacturing cost. What would the transfer price be? Would the transfer take place?

 

q301

Calculate the missing data for each of these four independent companies:

 

 

Revenue Expenses

A

$10,000

$ 7,800

B

$45,000

?

C

$200,000

$188,000

D

?

?

Margin; Turnover; ROI

LO3

Operating income

$ 2,200

$18,000

?

?

 

Assets

$20,000

?

$100,000

$9,600

 

Margin

?%

40%

?%

6.25%

 

Turnover

ROI

?

?%

0.3125

?%

?

?%

2.00

?%

 

 

Refer to Exercise 10-16. Assume that the required rate of return for each company is 12%. Calculate the residual income for each company.

 

 

 

 

Answers

Maurice Tutor
(5)
Status NEW Posted 24 Aug 2017 10:08 PM My Price 14.00

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