Chen Company’s Small Motor Division manufactures a number of small motors used in household and office appliances. The Household Division of Chen then assembles and packages such items as blenders and juicers. Both divisions are free to buy and sell any of their components internally or externally. The following costs relate to small motor LN233 on a per unit basis. Fixed cost per unit $ 5
Variable cost per unit $11
Selling price per unit $35 Instructions
(a) Assuming that the Small Motor Division has excess capacity, compute the minimum acceptable price for the transfer of small motor LN233 to the Household Division.
(b) Assuming that the Small Motor Division does not have excess capacity, compute the min-imum acceptable price for the transfer of the small motor to the Household Division.
(c) Explain why the level of capacity in the Small Motor Division has an effect on the transfer price.

a. $11

b. $35

c. If the transferring division does not have excess capacity,this would mean that some units that could have been sold externally would be transferred internally and this creates an opportunity cost. Opportunity costs increase the transfer price.However no opportunity cost exist if transferring division has excess capacity and hence a lower transfer price.

Explanation:

The minimum acceptable price is the price that is acceptable to the transferring division and out of a range of acceptable prices, it is that which would be the best for the company.

When there is excess capacity.

Note : No opportunity costs would exist.

Minimum acceptable price = Variable Cost - Internal Savings + Opportunity Cost

                                            = $11

When there is excess capacity.

Note : Opportunity costs would exist.

Minimum acceptable price = Variable Cost - Internal Savings + Opportunity Cost

                                            = $11 + ($35 - $11 )

                                            = $35

Why Capacity of transferring division (Small Motor Division) has an effect on the transfer price.

If the transferring division does not have excess capacity,this would mean that some units that could have been sold externally would be transferred internally and this creates an opportunity cost. Opportunity costs increase the transfer price.However no opportunity cost exist if transferring division has excess capacity and hence a lower transfer price.

bd = 9 cm

step-by-step explanation:

in a 30°-60°-90° triangle, the ratio of side lengths is 1 : √3 : 2. that is, the longest side (hypotenuse) is twice the length of the shortest side.

all of the triangles in your geometry are 30°-60°-90° triangles. ac is the hypotenuse of δacd, and the short side of δabc.

the short side ad of δacd will be half the length of ac, so 3 cm. the hypotenuse ab of δabc will be twice the length of ac, so 12 cm. segment bd is the difference of the lengths ab and ad, so is

bd = ab -ad

bd = 12 cm - 3 cm = 9 cm

comment on side length ratios

you can figure the ratios of side lengths in a 30°-60°-90° triangle by considering the trig ratios of the angles. or you can figure the length of the altitude of an equilateral triangle of side length 2 using the pythagorean theorem.

answer: 11/12

step-by-step explanation: 4 1/4 and 3 1/3 is equivalent to 4 3/12 and 3 4/12. 4 3/12 - 3 4/12 =11/12