Liapis Products,Inc.,has a Valve Division that manufactures and sells a number of products,including a standard valve that could be used by another division,the Pump Division,in one of its products.Data concerning that valve appear below:
The Pump Division is currently purchasing 12,000 of these valves per year from an overseas supplier at a cost of $62 per valve.
Required:
a.Assume that the Valve Division has enough idle capacity to handle all of the Pump Division's needs.What is the acceptable range,if any,for the transfer price between the two divisions?
b.Assume that the Valve Division is selling all of the valves it can produce to outside customers.What is the acceptable range,if any,for the transfer price between the two divisions?
c.Assume again that the Valve Division is selling all of the valves it can produce to outside customers.Also assume that $7 in variable expenses can be avoided on transfers within the company due to reduced shipping and selling costs.What is the acceptable range,if any,for the transfer price between the two divisions?
Definitions:
Q1: What is ChocO's materials (milk chocolate)quantity variance?<br>A)
Q7: Zaino Corporation manufactures one product.It does not
Q10: Manni Products,Inc.,has a Pump Division that manufactures
Q32: Assume that the Valve Division is selling
Q44: Which of the following performance measures will
Q101: The return on investment (ROI)last year for
Q136: The fixed manufacturing overhead volume variance for
Q179: If the company pursues the investment opportunity
Q196: The materials price variance for July is:<br>A)
Q245: The following materials standards have been established