Question
In: Accounting
Division S produces a component that is used by Division B. Division S’s costs of manufacturing...
Division S produces a component that is used by Division B. Division S’s costs of manufacturing the component is: Direct materials $30;Direct labor $8; Variable overhead $10; Fixed overhead $12 (based on a practical volume of 250,000 components). Division S also incurs these costs: fixed selling & administrative $1,200,000, and variable selling $4/unit. Division S expects to sell only 200,000 components next year. The variable selling expenses are avoidable if the component is sold internally. Division B has been buying the same component from an external supplier for $80 each. It expects to use 40,000 units of the component next year.
The manager of Division B has offered to buy 40,000 units from Division S for $56 each.
The maximum/minimum transfer price should be respectively:
a. $80/48 c. $48/48 b. $60/50 d. $38/30
Refer to question Suppose Divisions S and B agree on a transfer price of $56.
What is the benefit to each division respectively?
a. $320,000/$960,000 c. $960,000/$320,000 b. $1,280,000/$0 d. $0/$1,280,000
Solutions
ekkarill92 answered 1 year agoRelated Solutions
DC Inc. has two production divisions. Division A produces Component X, which is used by Division...
DC Inc. has two production divisions. Division A produces
Component X, which is used by Division B. To Division A, the cost
of producing one unit of X consists of unit direct material cost of
$100, unit direct labor cost of $130, unit variable overhead of
$125, and unit fixed overhead of $48 at the current production
volume. The current market price of X is $500 per unit. The company
is now trying to determine the transfer price of X....
DC Inc. has two production divisions. Division A produces Component X, which is used by Division...
DC Inc. has two production divisions. Division A produces
Component X, which is used by Division B. To Division A, the cost
of producing one unit of X consists of unit direct material cost of
$100, unit direct labor cost of $130, unit variable overhead of
$125, and unit fixed overhead of $48 at the current production
volume. The current market price of X is $500 per unit. The company
is now trying to determine the transfer price of X....
DC Inc. has two production divisions. Division A produces Component X, which is used by Division...
DC Inc. has two production divisions. Division A produces
Component X, which is used by Division B. To Division A, the cost
of producing one unit of X consists of unit direct material cost of
$100, unit direct labor cost of $130, unit variable overhead of
$125, and unit fixed overhead of $48 at the current production
volume. The current market price of X is $500 per unit. The company
is now trying to determine the transfer price of X....
The La Casa division of Peters Ltd produces an intricate component used in Peter’s major product...
The La Casa division of Peters Ltd
produces an intricate component used in Peter’s major product line.
Recently, the divisional manager has been concerned by a lack of
coordination between purchasing and production personnel and
believes that a monthly budgeting system should be introduced to
manage these interdependencies.
As an experiment, La Casa’s divisional
manager has decided to develop budget information for the third
quarter of the current year to test the system, before the full
budget system is implemented...
Assume the Small Components Division of Martin Manufacturing produces a video card used in the assembly...
Assume the Small Components Division of Martin Manufacturing
produces a video card used in the assembly of a variety of
electronic products.
The division's manufacturing costs and variable selling
expenses related to the video card are as follows:
Cost per unit
Direct materials
$9.00
Direct labor
$5.00
Variable manufacturing overhead
$8.00
Fixed manufacturing overhead
(at current production level)
$3.00
Variable selling expenses
$8.00
The Computer Division of Martin Manufacturing can use the video
card produced by the Small Components Division...
Kane Manufacturing has a division that produces two models of hibachis, model A and model B....
Kane Manufacturing has a division that produces two models of
hibachis, model A and model B. To produce each model A hibachi
requires 6 lb of cast iron and 12 min of labor. To produce each
model B hibachi requires 7 lb of cast iron and 6 min of labor. The
profit for each model A hibachi is $5, and the profit for each
model B hibachi is $4.50. If 2200 lb of cast iron and 40
labor-hours are available...
Kane Manufacturing has a division that produces two models of hibachis, model A and model B....
Kane Manufacturing has a division that produces two models of
hibachis, model A
and model B.
To produce each model A
hibachi requires 3 lb
of cast iron and 6 min
of labor. To produce each model B
hibachi requires 4 lb
of cast iron and 3 min
of labor. The profit for each model A
hibachi is $5,
and the profit for each model B
hibachi is $4.50.
If 1000 lb
of cast iron and 20 labor-hours
are available...
Kane Manufacturing has a division that produces two models of hibachis, model A and model B....
Kane Manufacturing has a division that produces two models of
hibachis, model A and model B. To produce each model A hibachi
requires 3 lb of cast iron and 6 min of labor. To produce each
model B hibachi requires 4 lb of cast iron and 3 min of labor. The
profit for each model A hibachi is $3, and the profit for each
model B hibachi is $2.50. If 1000 lb of cast iron and 20
labor-hours are available...
The Goodparts Company produces a component that is subsequently used in the aerospace industry. The component...
The Goodparts Company produces a component that is subsequently
used in the aerospace industry. The component consists of three
parts (A, B, and C) that are purchased from outside and cost 40,
35, and 15 cents per piece, respectively. Parts A and B are
assembled first on assembly line 1, which produces 170 components
per hour. Part C undergoes a drilling operation before being
finally assembled with the output from assembly line 1. There are,
in total, six drilling machines,...
The supplying division of a company produces a component which is sold to the company's buying...
The supplying division of a company produces a component which
is sold to the company's buying division and to external customers.
The supplying division has incremental costs of $40 per unit and
can sell the component to its external customers for $75. The
buying division can purchase a similar component from an external
supplier for $80. Which of the following is TRUE regarding Transfer
Prices?
1. Assuming the supplying division has no excess capacity, the
minimum amount it would charge...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Convert the following numbers as indicated. Use as few digits in the results as necessary or...
- Java program to implement the merge sort your own and test it to sort a list...
- CODE IN C++ PLEASE Write a program to implement the algorithm that you designed in Exercise...
- Show your work please What is the discount yield, bond equivalent yield, and effective annual return...
- Case 7 of the textbook examines the rise of Wal-Mart as a corporate bohemoth. One of...
- The type of listening that involves trying to understand a situation from the speaker’s perspective is...
- Based on the loanable funds theory, explain how each of the following changes should impact interest...
ADVERTISEMENT