Essay
Sandy Company has two divisions,Huron and Cortez.Huron produces an item that Cortez could use in its production.Cortez currently is purchasing 50,000 units from an outside supplier for $24 per unit.Huron is currently operating at full capacity of 600,000 units and has variable costs of $13.50 per unit.The full cost to manufacture the unit is $19.50.Huron currently sells 600,000 units at a selling price of $25.50 per unit.
a.What will be the effect on Sandy Company's operating profit if the transfer is made internally?
b.What is the minimum transfer price from Huron's perspective?
c.What is the maximum transfer price from Cortez' perspective?
Correct Answer:
Verified
a.$75,000 less profits = 50,000 × ($25.5...View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Correct Answer:
Verified
View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Q113: Avocado Company has an operating income of
Q114: Which of the following responsibility centers will
Q115: Calculate the missing values for each unique
Q116: Avocado Company has an operating income of
Q117: Estate has an ROI of 16% based
Q119: Florida Inc.has revenues of $1,500,000 resulting in
Q120: Which of the following statements contrasting residual
Q121: Indigo Corp.has an ROI of 15% and
Q122: Pine Corp.has revenues of $500,000 resulting in
Q123: The responsibility center in which the manager