12.75 Transfer pricing Qvat Division, a subsidiary of Imogene Ltd., manufactures a silicon...
90.2K
Verified Solution
Link Copied!
Question
Accounting
12.75 Transfer pricing Qvat Division, a subsidiary of Imogene Ltd., manufactures a silicon chip with the following costs: Direct material $15.00 Direct labor 26.25 Variable overhead Fixed overhead 18.00 Total $72.00 Some of the chips are sold externally for $162.00; others are transferred internally to the Kwak Division. Qvat Division's plant manager wants to establish a reasonable transfer price for chips transferred to Kwak. The purchasing manager of Kwak Division has informed the plant manager that comparable chips can be purchased externally in a price range from $112.50 to $172.50. a. Determine the upper and lower limits for the transfer price between Qvat Division and Kwak Division. Upper limit: $ Lower limit: $ + Any opportunity cost. b. If Qvat Division is presently selling all the chips it can produce to external buyers, what minimum price should be set for transfers to Kwak Division? $
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!
