Homework answers / question archive / Crede Inc

Crede Inc

Accounting

Share With

Crede Inc. has two divisions. Division A makes and sells student desks. Division B manufactures and sells reading lamps. Each desk has a reading lamp as one of its components. Division A can purchase reading lamps at a cost of $10 from an outside vendor. Division A needs 9,900 lamps for the coming year. Division B has the capacity to manufacture 54,800 lamps annually. Sales to outside customers are estimated at 44,900 lamps for the next year. Reading lamps are sold at $13 each. Variable costs are $7 per lamp and include $1 of variable sales costs that are not incurred if lamps are sold internally to Division A. The total amount of fixed costs for Division B is $87.500. Consider the following independent situations. (a) What should be the minimum transfer price accepted by Division B for the 9.900 lamps and the maximum transfer price paid by Division A? $ $ per unit Minimum transfer price accepted by Division B Maximum transfer price paid by Division A $ per unit e Textbook and Media Attempts: 0 of 3 used Submit Answer Save for Later Using multiple attempts will impact your score. 10% score reduction after attempt 2 (b) Suppose Division B could use the excess capacity to produce and sell externally 16,500 units of a new product at a price of $8 per unit. The variable cost for this new product is $5 per unit. What should be the minimum transfer price accepted by Division B for the 9,900 lamps and the maximum transfer price paid by Division A? Minimum transfer price accepted by Division B $ per unit Maximum transfer price paid by Division A $ per unit
(c). If Division A needs 14,850 lamps instead of 9,900 during the next year, what should be the minimum transfer price accepted by Division B and the maximum transfer price paid by Division A? (Round answers to 2 decimal places, eg. 10.50.) Minimum transfer price accepted by Division B $ $ per unit Maximum transfer price paid by Division A $ per unit e Textbook and Media Save for Later Attempts: 0 of 3 used Submit Answer Using multinle attemnts will imnart your score