If the Vega Division sells wheels to the Walsh Division, Vega can avoid P2 per wheel in sales commissions. An outside supplier has offered to supply wheels to the Walsh Division for P41 each. Suppose that the Vega Division has ample idle capacity so that transfers to the Walsh Division would not cut into its sales to outside customers. What should be the lowest acceptable transfer price from the perspective of the Vega Division? The Vega Division of Ace Company makes wheels which can either be sold to outside customers ortransferred to the Walsh Division of Ace Company. Last month the Walsh Division bought all4,000 of its wheels from the Vega Division for P42 each. The following data are available fromlast month's operations for the Vega Company:СарacitySelling price per wheel to outside customersVariable costs per when sold to outside customers12,000 wheelsP45P30

Solution: As Vega division has ample idle capacity that will not affect sale to outside customer,…

If the Vega Division sells wheels to the Walsh Division, Vega can avoid P2 per wheel in sales commissions. An outside supplier has offered to supply wheels to the Walsh Division for P41 each. Suppose that the Vega Division has ample idle capacity so that transfers to the Walsh Division would not cut into its sales to outside customers. What should be the lowest acceptable transfer price from the perspective of the Vega Division?

If the Vega Division sells wheels to the Walsh Division, Vega can avoid P2 per wheel in sales commissions. An outside supplier has offered to supply wheels to the Walsh Division for P41 each. Suppose that the Vega Division has ample idle capacity so that transfers to the Walsh Division would not cut into its sales to outside customers. What should be the lowest acceptable transfer price from the perspective of the Vega Division?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter2: Building Blocks Of Managerial Accounting

Section: Chapter Questions

Problem 11EA: Markson and Sons leases a copy machine with terms that include a fixed fee each month plus acharge...

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