Please refer the attached word document. Dont copy paste answer from Chegg Study.
Would appreciate if work is done on Excel and word document
REQUIRED:
a)Calculate the effect of the following on Halibut Co. Ltd.’s overall annual net income:
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i)York Division uses only its excess capacity to produce assemblies for Essex Division. |
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ii)York Division supplies all the assemblies required by Essex Division. |
b)
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i) |
Calculate the minimum unit transfer price acceptable to York Division for assemblies produced using only its excess capacity, assuming that York Division wishes to earn a 25 percent contribution margin ratio on transferred assemblies. |
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ii) |
Calculate the minimum unit transfer price acceptable to York Division if it supplies all the assemblies required by Essex Division, assuming York Division wishes to maintain its current level of net income. |
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iii) |
Calculate the maximum unit transfer price acceptable to Essex Division. |
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c) |
Assume that a transfer price of $6.25 per assembly is negotiated by York and Essex for all of Essex Division’s requirements.Briefly explain the impact of this agreement on the return on investment for each of the following: |
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i) |
Essex Division |
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ii) |
York Division |
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iii) |
Halibut Company Ltd. as a whole. |
Support your answers with calculations.
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