Business, 15.08.2020 20:01 lamashermosa23

Supreme Window Company manufactures windows for the home builders. The window frames are produced in the Frame division. The frames are then transferred to the Glass division, where the glass and hardware are installed. The company's best-selling product is a three-by-four-foot doublepaned window. The following discussion pertains to this product. The markets for both frames and finished windows exhibit perfect competition. The Frame Division has the option of either transferring the frames to the Glass division internally or sell them in the external market directly to custom home builders (Such home builders are capable of sourcing and installing the glass and hardware themselves)
The following per unit budgeted costs of the Frame division and Glass division is available from the accounting system:
Frame Division Glass Division
Direct Material $40 $58
Direct Labor $32 $40
Variable overhead $58 $58
Fixed manufacturing overhead is being applied to both divisions as a function of Direct labor cost. Fixed manufacturing overhead = 125.00% of Direct labor cost.
A) Assume that there is excess capacity in the Frame division. Use the general transfer pricing rule to compute the ideal transfer price.
B) Assume that the Frame division can sell as many frames that it can manufacture directly to home builders for a selling price of $220 per frame. Compute the ideal transfer price using the general transfer price rule.
C) Assume that the company policy is to transfer frames at a transfer price equal to full cost plus 10.00% markup. Calculate the transfer price for a frame transferred to the Glass division from the frame division.
D) The glass division has been approached by a customer for a special order.
The special order quantity = 2,700 windows.
Special order price offered by the customer = $433 per window.
Assume that the transfer price established under part (c) is being used in the company and the frame division has excess capacity.
Will this special order be accepted by the glass division manager who is being evaluated as a profit center manager?
E) Is goal congruence being achieved by the decision taken by the Frame division manager in part (D) above? F) Assume that the company policy is to use transfer price established by the ideal transfer pricing rule. Will the goal congruence be achieved for the special order discussed in part (D)?

Answers: 2

Show answers

Another question on Business

Business, 21.06.2019 21:00

You decide that structural changes must be made at holden evans immediately to deal with the additional product lines. equipment and employees will have to be moved around to optimize production of all of the products in house. this shouldn't be too difficult because many of the vitamins and supplements are produced using similar processes. you have several options available to facilitate this process. which of the following methods do you think is the best choice? select an option from the choices below and click submit. because the changes may result in the loss of several key employees, you hire outside consultants who specialize in hr law. this way any employee terminations will not result in lawsuits. you select an outside consulting firm that your company has never worked with before, but it has a reputation for using new technology in product lines that are similar to yours. you select several trusted managers to facilitate the transition of operations from overseas. these individuals can gather information and also smooth any rough spots that may occur.

Answers: 3

Answer

Business, 22.06.2019 03:00

You are the manager of the packaging department in a cookie factory. (obviously, the packaging employees cannot eat the cookies that are transferred in during the period.) after your employees insert cookies into colorful packages (step 1) for display on store shelves, the packages of cookies are then boxed using cardboard cartons (step 2) for shipment to stores. each unit of product is represented by a carton of packaged cookies. the packaging department began the period with 1,000 units of cookies. during the period, 5,000 units of cookies were transferred in from the baking department and 5,500 units of cookies were transferred out to the finished goods department. the number of units of cookies in the ending inventory of the packaging department equals:

Answers: 1

Answer

Business, 22.06.2019 11:00

Down under products, ltd., of australia has budgeted sales of its popular boomerang for the next four months as follows: unit salesapril 74,000may 85,000june 114,000july 92,000the company is now in the process of preparing a production budget for the second quarter. past experience has shown that end-of-month inventory levels must equal 10% of the following month’s unit sales. the inventory at the end of march was 7,400 units.required: prepare a production budget by month and in total, for the second quarter.

Answers: 3

Answer

Business, 22.06.2019 19:20

After jeff bezos read about how the internet was growing by 2,000 percent a month, he set out to use the internet as a new distribution channel and founded amazon, which is now the world's largest online retailer. this is clearly an example of a(n)a. firm that uses closed innovation. b. entrepreneur who commercialized invention into an innovation. c. business that entered the industry during its maturity stage. d. exception to the long tail business model

Answers: 1

Answer

You know the right answer?

Supreme Window Company manufactures windows for the home builders. The window frames are produced in...

Questions