MI
Michie Ignacio
Answers (3)
MI
Answered
According to research evidence, what kind of impact does strategic planning have on business performance?
A) Inconclusive
B) Neutral
C) Positive
D) Negative
E) Marginal
A) Inconclusive
B) Neutral
C) Positive
D) Negative
E) Marginal
On Sep 28, 2024
C
MI
Answered
In the case where interest rates are higher in Canada,which of the following is an example of a "carry trade"
A) Increase borrowing in the US,convert to Canadian dollars and invest in Canada
B) Increase borrowing in the US and invest in the US
C) Increase borrowing in Canada,convert to dollars and invest in the US
D) Increase borrowing in Canada and invest in Canada
A) Increase borrowing in the US,convert to Canadian dollars and invest in Canada
B) Increase borrowing in the US and invest in the US
C) Increase borrowing in Canada,convert to dollars and invest in the US
D) Increase borrowing in Canada and invest in Canada
On Sep 24, 2024
A
MI
Answered
Division Y has asked Division X of the same company to supply it with 8,800 units of part L763 this year to use in one of its products. Division Y has received a bid from an outside supplier for the parts at a price of $52 per unit. Division X has the capacity to produce 35,200 units of part L763 per year. Division X expects to sell 31,680 units of part L763 to outside customers this year at a price of $56.80 per unit. To fill the order from Division Y, Division X would have to cut back its sales to outside customers. Division X produces part L763 at a variable cost of $44 per unit. The cost of packing and shipping the parts for outside customers is $2 per unit. These packing and shipping costs would not have to be incurred on sales of the parts to Division Y.Required:a. What is the range of transfer prices within which both the Divisions' profits would increase as a result of agreeing to the transfer of 8,800 parts this year from Division X to Division Y? (Round your final answers to 2 decimal places.)b. Is it in the best interests of the overall company for this transfer to take place?
On Sep 22, 2024
a. From the perspective of Division X, profits would increase as a result of the transfer if and only if:Transfer price > Variable cost + Opportunity costThe opportunity cost is the contribution margin on the lost sales, divided by the number of units transferred:Opportunity cost = [(${{[a(5)]:#,###.00}} − ${{[a(6)]:#,###}} − ${{[a(7)]:#,###}}) × {{[a(10)]:#,###}}*] / {{[a(1)]:#,###}} = ${{[a(8)]:#,###.00}}
![a. From the perspective of Division X, profits would increase as a result of the transfer if and only if:Transfer price > Variable cost + Opportunity costThe opportunity cost is the contribution margin on the lost sales, divided by the number of units transferred:Opportunity cost = [(${{[a(5)]:#,###.00}} − ${{[a(6)]:#,###}} − ${{[a(7)]:#,###}}) × {{[a(10)]:#,###}}*] / {{[a(1)]:#,###}} = ${{[a(8)]:#,###.00}} Therefore, Transfer price > ${{[a(6)]:#,###}} + ${{[a(8)]:#,###.00}} = ${{[a(11)]:#,###.00}}.From the viewpoint of Division Y, the transfer price must be less than the cost of buying the units from the outside supplier. Therefore,Transfer price < ${{[a(2)]:#,###.00}}.Combining the two requirements, we get the following range of transfer prices:${{[a(11)]:#,###.00}} < Transfer price < ${{[a(12)]:#,###.00}}.b. Yes, the transfer should take place. From the viewpoint of the entire company, the cost of transferring the units within the company is ${{[a(11)]:#,###.00}}, but the cost of purchasing them from the outside supplier is ${{[a(12)]:#,###.00}}. Therefore, the company's profits increase on average by ${{[a(13)]:#,###.00}} for each of the special parts that is transferred within the company.](https://d2lvgg3v3hfg70.cloudfront.net/TB8314/11eb6b8f_6338_95bf_bf83_1b3fd1d7aeb0_TB8314_00.jpg)
Therefore, Transfer price > ${{[a(6)]:#,###}} + ${{[a(8)]:#,###.00}} = ${{[a(11)]:#,###.00}}.From the viewpoint of Division Y, the transfer price must be less than the cost of buying the units from the outside supplier. Therefore,Transfer price < ${{[a(2)]:#,###.00}}.Combining the two requirements, we get the following range of transfer prices:${{[a(11)]:#,###.00}} < Transfer price < ${{[a(12)]:#,###.00}}.b. Yes, the transfer should take place. From the viewpoint of the entire company, the cost of transferring the units within the company is ${{[a(11)]:#,###.00}}, but the cost of purchasing them from the outside supplier is ${{[a(12)]:#,###.00}}. Therefore, the company's profits increase on average by ${{[a(13)]:#,###.00}} for each of the special parts that is transferred within the company.
Therefore, Transfer price > ${{[a(6)]:#,###}} + ${{[a(8)]:#,###.00}} = ${{[a(11)]:#,###.00}}.From the viewpoint of Division Y, the transfer price must be less than the cost of buying the units from the outside supplier. Therefore,Transfer price < ${{[a(2)]:#,###.00}}.Combining the two requirements, we get the following range of transfer prices:${{[a(11)]:#,###.00}} < Transfer price < ${{[a(12)]:#,###.00}}.b. Yes, the transfer should take place. From the viewpoint of the entire company, the cost of transferring the units within the company is ${{[a(11)]:#,###.00}}, but the cost of purchasing them from the outside supplier is ${{[a(12)]:#,###.00}}. Therefore, the company's profits increase on average by ${{[a(13)]:#,###.00}} for each of the special parts that is transferred within the company.