The Car Division of Vehicle Co. uses 5,000 carburetors per month in its production of automotive engines. Car Division currently purchases all the carburetors it needs from an external supplier at an...


Assume that the Engine Division would not incur any variable selling costs on units that are transferred internally.  What is the minimum of the transfer price range for a transfer between Car Division and Engine Division?


The Car Division of Vehicle Co. uses 5,000 carburetors per month in its production of<br>automotive engines. Car Division currently purchases all the carburetors it needs from an<br>external supplier at an average cost of P100. The Engine Division of Vehicle Co. manufactures<br>an identical type of carburetor that the Car Division requires. The Engine Division is currently<br>operating at its capacity of 15,000 units per month and sells all its output to a foreign car<br>manufacturer at P106 per unit. Based on 15,000 units, its cost structure is as follows:<br>Variable selling costs<br>Variable manufacturing costs<br>All fixed costs<br>P10<br>70<br>10<br>

Extracted text: The Car Division of Vehicle Co. uses 5,000 carburetors per month in its production of automotive engines. Car Division currently purchases all the carburetors it needs from an external supplier at an average cost of P100. The Engine Division of Vehicle Co. manufactures an identical type of carburetor that the Car Division requires. The Engine Division is currently operating at its capacity of 15,000 units per month and sells all its output to a foreign car manufacturer at P106 per unit. Based on 15,000 units, its cost structure is as follows: Variable selling costs Variable manufacturing costs All fixed costs P10 70 10

Jun 08, 2022
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