1. Refer to Kingwood Corporation. What is the minimum price per unit that X Division could accept from Y Division for 5,000 units of the gear assembly and be no worse off than currently?2. Refer to Kingwood Corporation. What will be the effect on overall corporate profits if the two divisions agree to an internal transfer of 5,000 units? Kingwood Corporation is comprised of two divisions: X and Y. X currently produces and sellsa gear assembly used by the automotive industry in electric window assemblies. X iscurrently selling all of the units it can produce (25,000 per year) to external customers for$25 per unit. At this level of activity, X's per unit costs are:Variable:ProductionSG&AFixed:ProductionSG&A$72Y Division wants to purchase 5,000 gear assemblies per year from X Division. Y Divisioncurrently purchases these units from an outside vendor at $22 each.65

Internal transfer means where one independent department is transferring the goods to another…

1. Refer to Kingwood Corporation. What is the minimum price per unit that X Division could accept from Y Division for 5,000 units of the gear assembly and be no worse off than currently? 2. Refer to Kingwood Corporation. What will be the effect on overall corporate profits if the two divisions agree to an internal transfer of 5,000 units?

1. Refer to Kingwood Corporation. What is the minimum price per unit that X Division could accept from Y Division for 5,000 units of the gear assembly and be no worse off than currently? 2. Refer to Kingwood Corporation. What will be the effect on overall corporate profits if the two divisions agree to an internal transfer of 5,000 units?

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 17E: Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside...

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