Stanco, Inc., is a decentralized organization with five divisions. The company’s Electronics Division produces a variety of electronics items, including an XL5 circuit board. The division (which is operating at capacity) sells the XL5 circuit board to regular customers for $12.50 each. The circuit boards have a variable production cost of $8.25 each.
The company’s Clock Division has asked the Electronics Division to supply it with a large quantity of XL5 circuit boards for only $9 each. The Clock Division, which is operating at only 60% of capacity, will put the circuit boards into a timing device that it will produce and sell to a large oven manufacturer. The cost of the timing device being manufactured by the Clock Division follows:
XL5 circuit board (desired cost) . . . . . . . . . . . . . . . . . . . $ 9.00
Other purchased parts (from outside vendors). . . . . . . . . 30.00
Other variable costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.75
Fixed overhead and administrative costs . . . . . . . . . . . . . 10.00
Total cost per timing device . . . . . . . . . . . . . . . . . . . . . . . $69.75
The manager of the Clock Division feels that she can’t quote a price greater than $70 per timing device to the oven manufacturer if her division is to get the job. As shown above, in order to keep the price at $70 or less, she can’t pay more than $9 per unit to the Electronics Division for the XL5 circuit boards. Although the $9 price for the XL5 circuit boards represents a substantial discount from the normal $12.50 price, she feels that the price concession is necessary for her division to get the oven manufacturer contract and thereby keep its core of highly trained people.
The company uses return on investment (ROI) to measure divisional performance.
1. Assume that you are the manager of the Electronics Division. Would you recommend that your division supply the XL5 circuit boards to the Clock Division for $9 each as requested? Why or why not? Show all computations.
2. Would it be profitable for the company as a whole for the Electronics Division to supply the Clock Division with the circuit boards for $9 each? Explain your answer.
3. In principle, should it be possible for the two managers to agree to a transfer price in this particular situation? If so, within what range would that transfer price lie?
4. Discuss the organizational and manager behavior problems, if any, inherent in this situation.
What would you advise the company’s president to do in this situation?
Try it now!
How it works?
Follow these simple steps to get your paper done
Place your order
Fill in the order form and provide all details of your assignment.
Proceed with the payment
Choose the payment system that suits you most.
Receive the final file
Once your paper is ready, we will email it to you.
Assignment Help has assembled a team of highly skilled writers with diverse experience in the online writing circles. Our aim is to become a one stop shop for all your Academic/ online writing. Check out below our amazing service!
At Assignment Help, we prioritize on all aspects that creates a good grade such as impeccable grammar, proper structure, zero-plagiarism, and conformance to guidelines. The principal purpose of essay writing is to present the author's evaluation concerning a singular subject about which they have made. Since Professionalism is the mother of every success, try our team of experienced writers in helping you complete your essays and other assignments.
You have been trying to join that prestigious institution you long yearned for, but the hurdle of an admission essay has become a stumbling block. We have your back, with our proven team that has gained invaluable experience over time, your chance of joining that institution is now! Just let us work on that essay.How do you write an admission essay? How do you begin the essay? For answers, try Quality Custom Writers Now!
Editing and Proofreading
Regardless of whether you're pleased with your composing abilities, it's never an impractical notion to have a second eye go through your work. The best editing services leaves no mistake untouched. We recognize the stuff needed to polish up a writing; as a component of our editing and proofreading, we'll change and refine your write up to guarantee it's amazing, and blunder free. Our group of expert editors will examine your work, giving an impeccable touch of English while ensuring your punctuation and sentence structures are top-notch.
We pride ourselves in having a team of clinical writers. The stringent and rigorous vetting process ensures that only the best persons for job. We hire qualified PhD and MA writers only. We equally offer our team of writers bonuses and incentives to motivate their working spirit in terms of delivering original, unique, and informative content. They are our resources drawn from diverse fields. Therefore your technical paper is in the right hands. Every paper is assessed and only the writers with the technical know-how in that field get to work on it.
College Essay Writing
If all along you have been looking for a trustworthy college essay service provider that provides superb academic papers at reasonable prices, then be glad that you search has ended with us. We are your best choice! Get high-quality college essay writing from our magnificent team of knowledgeable and dedicated writers right now!
Quality Assignment/Homework Help
We give the students premium quality assignments, without alarming them with plagiarism and referencing issues. We ensure that the assignments stick to the rules given by the tutors. We are specific about the deadlines you give us. We assure you that you will get your papers well in advance, knowing that you will review and return it if there are any changes, which should be incorporated.