Business, 31.03.2020 19:01 jaueuxsn

Sako Company's Audio Division produces a speaker that is used by manufacturers of various audio products. Sales and cost data on the speaker follow:

Selling price per unit on the intermediate market $60
Variable costs per unit $42
Fixed costs per unit (based on capacity) $8
Capacity in units 25,000

Sako Company has a Hi-Fi Division that could use this speaker in one of its products. The Hi-Fi Division will need 10,000 speakers per year. It has received a quote of $32 per speaker from another manufacturer. Sako Company evaluates division managers on the basis of divisional profits.

Required:
1. Assume that the Audio Division is now selling only 20,000 speakers per year to outside customers.
a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hi-Fi Division?
b. From the standpoint of the Hi-Fi Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division?
c. If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the Hi-Fi Division? Why or why not?
d. From the standpoint of the entire company, should the transfer take place? Why or why not?

2. Assume that the Audio Division is selling all of the speakers it can produce to outside customers.
a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hi-Fi Division?
b. From the standpoint of the Hi-Fi Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division?
c. If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 5,000 speakers from the Audio Division to the Hi-Fi Division? Why or why not?
d. From the standpoint of the entire company, should the transfer take place? Why or why not?

Answers: 3

Show answers

Another question on Business

Business, 21.06.2019 20:30

Max fischer is a beekeeper. his annual group insurance costs 11,700. his employer pays 60% of the cost. how much does max pay semimonthly for it?

Answers: 1

Answer

Business, 22.06.2019 02:30

The cost of capital: introduction the cost of capital: introduction companies issue bonds, preferred stock, and common equity to aise capital to invest in capital budgeting projects. capital is』necessary factor of production and like any other factor, it has a cost. this cost is equal to the select the applicable security. the rates of return that investors require on bonds, preferred stocks, and common equity represent the costs of those securities to the firm. companies estimate the required returns on their securities, calculate a weighted average of the costs of their different types of capital, and use this average cost for capital budgeting purposes. required return on rate: when calculating om operations when the firm's primary financial objective is to select shareholder value. to do this, companies invest in projects that earnselect their cost of capital. so, the cost of capital is often referred to as the -select -select and accruals, which a se spontaneously we hted average cost of capital wa c our concern is with capital that must be provided by select- 쑤 interest-bearing debt preferred stock and common equity. capital budgeting projects are undertaken, are not included as part of total invested capital because they do not come directly from investors. which of the following would be included in the caculation of total invested capital? choose the response that is most correct a. notes payable b. taxes payable c retained earnings d. responses a and c would be included in the calculation of total invested capital. e. none of the above would be included in the cakulation of total invested capital.

Answers: 2

Answer

Business, 22.06.2019 08:00

Shrieves casting company is considering adding a new line to its product mix, and the capital budgeting analysis is being conducted by sidney johnson, a recently graduated mba. the production line would be set up in unused space in the main plant. the machinery’s invoice price would be approximately $200,000, another $10,000 in shipping charges would be required, and it would cost an additional $30,000 to install the equipment. the machinery has an economic life of 4 years, and shrieves has obtained a special tax ruling that places the equipment in the macrs 3-year class. the machinery is expected to have a salvage value of $25,000 after 4 years of use. the new line would generate incremental sales of 1,250 units per year for 4 years at an incremental cost of $100 per unit in the first year, excluding depreciation. each unit can be sold for $200 in the first year. the sales price and cost are both expected to increase by 3% per year due to inflation. further, to handle the new line, the firm’s net working capital would have to increase by an amount equal to 12% of sales revenues. the firm’s tax rate is 40%, and its overall weighted average cost of capital, which is the risk-adjusted cost of capital for an average project (r), is 10%. define “incremental cash flow.” (1) should you subtract interest expense or dividends when calculating project cash flow?

Answers: 1

Answer

Business, 22.06.2019 12:30

howard, fine, & howard is an advertising agency. the firm uses an activity-based costing system to allocate overhead costs to its services. information about the firm's activity cost pool rates follows: stooge company was a client of howard, fine, & howard. recently, 7 administrative assistant hours, 3 new ad campaigns, and 8 meeting hours were incurred for the stooge company account. using the activity-based costing system, how much overhead cost would be allocated to the stooge company account?

Answers: 1

Answer

You know the right answer?

Sako Company's Audio Division produces a speaker that is used by manufacturers of various audio prod...

Questions

Business, 01.07.2019 18:30

7. which type of business document do you think you are most likely to use often in your company? why?...