Answered

Discover a world of knowledge at Westonci.ca, where experts and enthusiasts come together to answer your questions. Explore thousands of questions and answers from a knowledgeable community of experts on our user-friendly platform. Discover in-depth answers to your questions from a wide network of professionals on our user-friendly Q&A platform.

The Trailer division of Baxter Bicycles makes bike trailers that attach to bicycles and can carry children or cargo. The trailers have a retail price of $107 each. Each trailer incurs $44 of variable manufacturing costs. The Trailer division has capacity for 24,000 trailers per year and incurs fixed costs of $560,000 per year. Required: 1. Assume the Assembly division of Baxter Bicycles wants to buy 5,600 trailers per year from the Trailer division. If the Trailer division can sell all of the trailers it manufactures to outside customers, what price should be used on transfers between Baxter Bicycles's divisions

Sagot :

Parrain

Answer: $107

Explanation:

When a division is able to sell all of its products to consumers outside the company, the transfer price within the company should be at the same price that the good would be sold to outside consumers.

This is to ensure that the division does not suffer an economic loss by selling to another division instead of selling to an outside customer. In this case therefore, the Trailer division should transfer the trailers at the retail price of $107 that it would have made from selling to outside customers.

We appreciate your visit. Our platform is always here to offer accurate and reliable answers. Return anytime. Thank you for your visit. We're committed to providing you with the best information available. Return anytime for more. Westonci.ca is here to provide the answers you seek. Return often for more expert solutions.