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Cost Management: A Strategic Emphasis 7th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins
Edition 7ISBN: 978-0077733773Cost Management: A Strategic Emphasis 7th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins
Edition 7ISBN: 978-0077733773 Exercise 49
Transfer Pricing; Decision Making Truball Inc., which manufactures sports equipment, consists of several operating divisions. Division A has decided to go outside the company to buy materials since division B plans to increase its selling price for the same materials to $200. Information for division A and division B follows:
Required
1. Will the company benefit if division A purchases outside the company Assume that division B cannot sell its materials to outside buyers.
2. Assume that division B can save $200,000 in fixed costs if it does not manufacture the material for division A. Should division A purchase from the outside market
3. Assume the situation in requirement 1. If the outside market value for the materials drops $20, should division A buy from the outside Explain.
Required
1. Will the company benefit if division A purchases outside the company Assume that division B cannot sell its materials to outside buyers.
2. Assume that division B can save $200,000 in fixed costs if it does not manufacture the material for division A. Should division A purchase from the outside market
3. Assume the situation in requirement 1. If the outside market value for the materials drops $20, should division A buy from the outside Explain.
Explanation
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Cost Management: A Strategic Emphasis 7th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins
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