Please show your work. Thanks! omewOrR. Onapter T2 (22) Assigned Homework core:
ID: 2438625 • Letter: P
Question
Please show your work.Thanks! omewOrR. Onapter T2 (22) Assigned Homework core: 0.58 of 7 pts 2 of 3 (2 complete) Hw Score: 4.35%, 0.87 of 20 2E22-21 (similar to) Question Help Speedy Motors, Inc., operates as a decentralized multidivision company. The Vala division of Speedy Motors purchases most of its airbags from the airbag division. The a bag division's incremental cost for manufacturing the airbags is S 140 per unit. The airbag division is currently working at 70% of capacity. The current market price of the airbags is $200 per unit Read the requirements. Requirement 1. What is the minimum price at which the airbag division would sell airbags to the Vala division? The minimum price at which the airbag division would sell airbags to the Vala division is incremental costs 140, the Requirement 2. Su capacity sell products internally, they must do so at the incremental cost. Evaluate this transfer-pricing policy using the criteria of goal congruence, evaluating division performance, motivating management effort, and preserving division autonomy ppose that Speedy Motors requires that whenever divisions with unused Determine whether transferring products internally at incremental cost has the following properties and give a reason why 4 Choose from any drop-down list and then click Check Answer Clear All Final Check A: See Answer Q: Mod Wheel Inc , has two divisions A and B that manufacture expensive bicycles Division A 4
Explanation / Answer
1 Minimum transfer price=Incremental cost=$140 2 Goal congruence Yes Air bag division utilises the external sales Evaluating division performance No Transfer price does not cover full cost Motivating management effort Yes Since transfer pricing is based on incremental cost,it forces managers to control costs Preserving division autonomy No Transfer price is based on rule. 3 Minimum transfer price=Incremental cost=$140 Maximum transfer price=Market price=$200 Goal congruence Yes Two divisions will maximize profit Evaluating division performance Yes Division performance will be positive since transfer price is based on negotiations Motivating management effort Yes Transfer price is independent of actual prices Preserving division autonomy Yes Transfer price is not based on rule. 4 Hybrid transfer price=(140+200)/2=$170