The Sunland Company is a multidivisional company. Its managers have full responsibility for profits and...

60.1K

Verified Solution

Question

Accounting

image
image
The Sunland Company is a multidivisional company. Its managers have full responsibility for profits and complete autonomy to accept or reject transfers from other divisions. Division A produces a sub-assembly part for which there is a competitive market. Division B currently uses this sub-assembly for a final product that is sold outside at $1,392. Division A charges Division B the market price of $812 per unit of the part. Unit variable costs are $604 and $696 for Divisions A and B, respectively. The manager of Division B feels that Division A should transfer the part at a lower price than market because at market, Division B is unable to make a profit. (a) Your answer has been saved. See score details after the due date. Calculate Division B's contribution margin if transfers are made at the market price, and calculate the company's total contribution margin. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Division B's contribution margin $ Company's total contribution margin Your answer has been saved. See score details after the due date. Assume that Division A can sell all its production in the open market. Should Division A transfer the goods to Division B? The transfer be made. If so, at what price? Attempts: 1 of 1 used (c) Assume that Division A can sell only 500 units externally at $812 per unit out of the 1,000 units that it can produce every month. Assume also that a 20% reduction in price is necessary to sell all 1,000 units each month. Should transfers be made? If so, how many units should the division transfec and at what price? (Round price per unit to 1 dechial place, e,g. 52,7 ) units at

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students