29 Jun Question Kessler Enterprises manu
Question
Kessler Enterprises manufactures computer monitors in its Video Division. These monitors can be sold internally to the EDD Division of Kessler or externally to independent customers. Sales and costs for the most popular monitor manufactured by the Video Division are as follows.
Per unit Selling Price $135
Per unit Variable Cost $102
Per unit Fixed Cost [based on full
production capacity] $ 28
Full monthly production capacity 10,000 units
A. The Video Division of Kessler plans to sell 96,000 of these monitors to outside customers in the coming year. The EDD Division of Kessler needs and has been buying 20,000 identical monitors per year from an outside supplier at a price of $135.
What is the minimum transfer price for the monitor that the Video Division should be willing to accept on an internal transfer?
What is the maximum transfer price the EDD Division should be willing to pay for these monitors?
If the two divisions agree to a transfer price of $125 per monitor, calculate the effect on each division’s net income for the year.
B. Now assume the Video Division of Kessler plans to sell 115,000 of these monitors to outside customers in the coming year. The EDD Division needs and has been buying 20,000 identical monitors per year from an outside supplier at a price of $135. The Video Division can eliminate $12 per monitor of variable costs on any transfers to the EDD Division because no sales commissions will be paid on any monitors sold to the EDD Division.
If the two divisions agree to a transfer price of $120 per monitor, calculate the effect on each division’s net income for the year.
What is the minimum transfer price for the monitor that the Video Division should be willing to accept on an internal transfer?
C. List at least three qualitative factors that should be considered when deciding whether the Video Division should sell computer monitors to the EDD Division of Kessler Enterprises.
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.