Question

BE  154

Alma and Associates, a new consulting service, recently received a bill for repairs on its computers totaling $2,280. Alma thinks it may have been overcharged and is trying to recreate the components of the bill. She knows the hourly rate is $75 and 15 hours of labor was charged. She also knows $700 of parts were replaced.

 

Instructions

Compute the material loading charge percentage the repair service used.

BE  155

Freberg Company, a division of Dudge Cars, produces automotive batteries. Freberg sells the batteries to its customers for $92 per unit. The variable cost per unit is $42, and fixed costs per unit are $16. Top management of Dudge Cars would like Freberg to transfer 30,000 batteries to another division within the company at a price of $54. Freberg is operating at full capacity.

 

Instructions

Compute the minimum transfer price that Freberg should accept.

 

BE  156

Freberg Company, a division of Dudge Cars, produces automotive batteries. Freberg sells the batteries to its customers for $92 per unit. The variable cost per unit is $55, and fixed costs per unit are $16. Top management of Dudge Cars would like Freberg to transfer 30,000 batteries to another division within the company at a price of $61. Freberg has sufficient excess capacity to provide the 30,000 batteries to the other division.

 

Instructions

Compute the minimum transfer price that Freberg should accept.

Answer 1

BE  154: 

material loading charge percentage = 65%

Total bill for rapairs	$2,280
less: Hourly labor charges  (15 * 75 )	(1,125 )
Repair cost of parts	1,155
Less : Cost of parts	(700 )
Material loading charges	455
Loading percentage  (455/700 )x100	65%

 

BE  155:

The minimum transfer price is $92

Explanation:

 Minimum transfer price = Variable cost + Opportunity cost

                                          = $42 + $(92-42)

                                          = $42 + $50 = $92 

BE  156 :

The minimum transfer price is $55

Explanation:

Since, there is excess capacity is available to cater the needs of other division, the mnimum transfer price would be variable cost only

material loading charge percentage = 65%