We appreciate your visit to The Trailer Division of Baxter Bicycles makes bike trailers that attach to bicycles and can carry children or cargo The trailers have a market price. This page offers clear insights and highlights the essential aspects of the topic. Our goal is to provide a helpful and engaging learning experience. Explore the content and find the answers you need!
Answer :
1. The price should be used on transfers between divisions $66 per trailer. and 2. The range of acceptable prices on transfers between divisions is $66 to $91 per trailer.
1. The transfer price for the assembly division to purchase 4,800 trailers per year from the trailer division should be at least equal to the market price of $91 per trailer, since the trailer division can sell all of its trailers to outside customers at that price.
2. Since the trailer division has excess capacity and is only selling 9,400 trailers to outside customers, there is room to negotiate a lower transfer price. To determine the range of acceptable prices, we need to consider the variable manufacturing costs of $46 per trailer and the fixed costs of $520,000 per year.
One approach is to calculate the contribution margin per trailer, which is the market price minus variable manufacturing costs:
Contribution margin per trailer = $91 - $46 = $45
This means that each trailer sold generates $45 towards covering the fixed costs of the trailer division.
To determine the lowest acceptable transfer price, we need to ensure that the assembly division's purchase of 4,800 trailers still covers the trailer division's fixed costs.
Fixed costs per trailer = $520,000 / 26,000 trailers = $20 per trailer
Therefore, the lowest acceptable transfer price would be:
$46 variable manufacturing costs per trailer + $20 fixed costs per trailer = $66 per trailer
To determine the highest acceptable transfer price, we need to ensure that the transfer price does not exceed the market price of $91 per trailer.
Therefore, the range of acceptable transfer prices is $66 to $91 per trailer.
Know more about Contribution margin here:
https://brainly.com/question/30459935
#SPJ11
Thanks for taking the time to read The Trailer Division of Baxter Bicycles makes bike trailers that attach to bicycles and can carry children or cargo The trailers have a market price. We hope the insights shared have been valuable and enhanced your understanding of the topic. Don�t hesitate to browse our website for more informative and engaging content!
- Why do Businesses Exist Why does Starbucks Exist What Service does Starbucks Provide Really what is their product.
- The pattern of numbers below is an arithmetic sequence tex 14 24 34 44 54 ldots tex Which statement describes the recursive function used to..
- Morgan felt the need to streamline Edison Electric What changes did Morgan make.
Rewritten by : Barada
