1. What would be the total contribution to profit to the company as a whole for 10,000 units transferred to Division B and later sold to outside customers at P21 per unit. Division A has an expected annual production of 50,000 units and fixed manufacturingcosts of P300,000. The full absorption cost per unit based on the expected annualproduction is shown below:|Variable costFixed costsFull absorption costP6P12Division A has idle capacity and Division B is considering buying 10,000 units fromDivsion A to be processed further and to sell at P21 per unit. Division B would incuradditional processing costs and selling costs of P6 and P5 per unit, respectively.P20,000P40,000(P20,000)P80,000

Variable cost means the cost which vary with the level of output where as fixed cost remain fixed…

Answered: 1. What would be the total contribution…

1. What would be the total contribution to profit to the company as a whole for 10,000 units transferred to Division B and later sold to outside customers at P21 per unit.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

1. What would be the total contribution to profit to the company as a whole for 10,000 units transferred to Division B and later sold to outside customers at P21 per unit.

Division A has an expected annual production of 50,000 units and fixed manufacturing
costs of P300,000. The full absorption cost per unit based on the expected annual
production is shown below:
|Variable cost
Fixed costs
Full absorption cost
P6
P12
Division A has idle capacity and Division B is considering buying 10,000 units from
Divsion A to be processed further and to sell at P21 per unit. Division B would incur
additional processing costs and selling costs of P6 and P5 per unit, respectively.
P20,000
P40,000
(P20,000)
P80,000

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