10-13Jesper, Inc., has a number of divisions including a Furniture Division and a MotelDivision. The Motel Division owns and operates a line of budget motels locatedalong major highways. Each year, the Motel Division purchases furniture for themotel rooms. Currently, it purchases a basic dresser from an outside supplier for$42. Carrie Burnside, manager of the Furniture Division, has approached GeorgeTransfer PricingLO5454 Part 4 / Planning and ControlEXCELSanchez, manager of the Motel Division, about selling dressers to the Motel Divi-sion. Carrie has researched the dresser costs and determined the following costs:Direct materialsDirect labor$ 84Variable overhead3Fixed overheadTotal manufacturing cost12$27Currently, the Furniture Division has capacity to produce 75,000 dressers but isonly producing 60,000. The Motel Division needs 10,000 dressers per year.Required1. What is the maximum transfer price? The minimum transfer price? Should thetransfer occur?2. Suppose that Carrie and George agree on a transfer price of $30. What is thebenefit to each division? What is the benefit to the company as a whole?3. Suppose that the Furniture Division were operating at capacity. What would bethe maximum transfer price? The minimum transfer price? Should the transfertake place in this case? Why or why not?

Transfer price- The transfer price is the price used in a transaction between individuals inside the…

10-13 Jesper, Inc., has a number of divisions including a Furniture Division and a Motel Division. The Motel Division owns and operates a line of budget motels located along major highways. Each year, the Motel Division purchases furniture for the motel rooms. Currently, it purchases a basic dresser from an outside supplier for $42. Carrie Burnside, manager of the Furniture Division, has approached George Transfer Pricing LO5 454 Part 4 / Planning and Control (EXCEL Sanchez, manager of the Motel Division, about selling dressers to the Motel Divi- eion Carrie has researched the dreeeer costs and determined the following coste

10-13 Jesper, Inc., has a number of divisions including a Furniture Division and a Motel Division. The Motel Division owns and operates a line of budget motels located along major highways. Each year, the Motel Division purchases furniture for the motel rooms. Currently, it purchases a basic dresser from an outside supplier for $42. Carrie Burnside, manager of the Furniture Division, has approached George Transfer Pricing LO5 454 Part 4 / Planning and Control (EXCEL Sanchez, manager of the Motel Division, about selling dressers to the Motel Divi- eion Carrie has researched the dreeeer costs and determined the following coste

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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2. Sunshine Company sells custom made surf boards in California. The finance manager has supplied the following data from its activity-based costing system: Overhead Costs Staff Salaries $500,000 Selling and administration overheads 200,000 Total Overhead Costs $700,000 Activity Cost Pool Product design Order Processing Customer Support Activity Measure Number of new designs Number of Customer orders Number of Customers Organization sustaining activity Total Activity for the Year 500 new designs 700 orders 400 customers Not applicable Others Distribution of Resource Consumption across Activities Product Order Customer Other Total Design Processing Support Staff Salaries 40% 30% 20% 10% 100% Selling and 30% 10% 20% 40% 100% administration overheads During the year Sunshine Company completed three individual orders for a new customer, Tarpaper Inc. Two different designs of surfboards were prepared for and sold to this new customer - Orange Tangerine and Blue Waves. Data concerning the…
WV Construction has two divisions: Remodeling and New Home Construction. Each division has an on-site supervisor who is paid a salary of $82,000 annually and one salaried estimator who is paid $46,000 annually. The corporate office has two office administrative assistants who are paid salaries of $50,000 and $37,000 annually. The president's salary is $153,000. How much of these salaries are common fixed expenses?
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WV Construction has two divisions: Remodeling and New Home Construction. Each division has an on-site supervisor who is paid a salary of $58,000 annually and one salaried estimator who is paid $52,000 annually. The corporate office has two office administrative assistants who are paid salaries of $38,000 and $31,000 annually. The president's salary is $127,000. How much of these salaries are common fixed expenses? $196,000 $306,000 $110,000 $127,000
Sampson Company operates a manufacturing facility where several products are made. Deach product is considered a business segment, and the product managers have the opportunity to receive a bonus based on the profit of the segment. Franco Hopper is the manager for the scissors product line. Production and sales for the scissors product line loene for the past three years are shown below: Year 1: Year 2: Year 3: Units produced 100,000 125,000 160,000 Units sold 100,000 100,000 100,000 Sales price per unit 12.00 12.00 12.00 Variable manufacturing cost per unit 5.00 5.00 5.00 Total fixed manufacturing cost 200,000 200,000 200,000 Hopper’s bonus is .5% of the gross profit of the scissors product line, based on absorption costing. Upper management is discussing changing the bonus system so that bonuses are based on operating income using variable costing. Hopper is opposed to this change and has been trying to convince the other product managers to join him in voicing their…
Suppose that Stillwater Designs has two classes of distributors: JIT distributors and non-JIT distributors. The JIT distributor places small, frequent orders, and the non-JIT distributor tends to place larger, less frequent orders. Both types of distributors are buying the same product. Stillwater Designs provides the following information about customer-related activities and costs for the most recent quarter: JITDistributors Non-JITDistributors Sales orders 1,000 100 Sales calls 70 70 Service calls 350 175 Average order size 650 6,500 Manufacturing cost/unit $125 $125 Customer costs: Processing sales orders $3,380,000 Selling goods 1,120,000 Servicing goods 1,050,000 Total $5,550,000 Required: 1. Calculate the total revenues per distributor category, and assign the customer costs to each distributor type by using revenues as the allocation base. Selling price for one unit is $150. Round calculations to the nearest dollar. JIT…
Required information [The following information applies to the questions displayed below.] Arctica manufactures snowmobiles and ATVS. These products are made in different departments, and each department has its own manager. Each responsibility performance report includes only those costs that the department manager can control: direct materials, direct labor, supplies used, and utilities. Budget For Year Ended December 31 Direct materials Direct labor Totals Department manager salaries Supplies used Utilities Rent Totals Snowmobile $ 19,810 10,700 ▸ 4,600 3,630 Controllable Costs Responsibility Accounting Performance Report Manager, Snowmobile Department For Year Ended December 31 Budgeted $ 390 6,000 $ 45,130 Prepare a responsibility accounting performance report for the snowmobile department. Note: Under budget amounts should be indicated by a minus sign. 0 $ ATV $ 27,800 20,800 5,500 Actual 930 570 6,600 $ 62,200 Actual Snowmobile $ 19,720 10,990 4,700 3,470 360 5,600 $ 44,840 Over…
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S Zachary Health Care Center Incorporated has three clinics servicing the Seattle metropolitan area. The company's legal services department supports the clinics. Moreover, its computer services department supports all of the clinics and the legal services department. The annual cost of operating the legal services department is $316,050. The annual cost of operating the computer services department is $451,000. The company uses the number of patients served as the cost driver for allocating the cost of legal services and the number of computer workstations as the cost driver for allocating the cost of computer services. Other relevant information follows. Number of Patients 6,900 5,300 7,100 Number of Workstations Sewell clinic Alphretta clinic Gwinnett clinic Legal services Computer services Required a. Allocate the cost of computer services to all of the clinics and the legal services department. b. After allocating the cost of computer services, allocate the cost of legal services…