Essay on Cost Accounting Chapter 11 Question1

1168 Words Feb 10th, 2016 5 Pages
5/20/2015

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Score: 40 out of 40 points (100%)

1.

award:

10 out of
10.00 points

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 Variable costs per unit Fixed costs per unit (based on capacity) Capacity in units

$47
$16
$8
59,000

Sako Company has a Hi­Fi Division that could use this speaker in one of its products. The Hi­Fi 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
…show more content…
From the standpoint of the Hi­Fi 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 http://ezto.mheducation.com/hm_accounting.tpx?todo=printviewSingle 2/5

5/20/2015

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to the transfer of 10,000 speakers from the Audio Division to the Hi­Fi Division? No

d. From the standpoint of the entire company, should the transfer take place? Transfer should not take place.

Worksheet

Learning Objective: 11­05
(Appendix 11A) Determine the range, if any, within which a negotiated transfer price should fall.

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 Variable costs per unit Fixed costs per unit (based on capacity) Capacity in units

$47
$16
$8
59,000

Sako Company has a Hi­Fi Division that could use this speaker in one of its products. The Hi­Fi 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

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