45. Division A of ABC Corp. sells 96,000 units of Part X to the outside market. Part X sells forPhp12 each and has a variable cost per unit of Php8. Fixed cost per unit amounted to Php3.Division A has a capacity to produce 120,000 units per period. Division B currentlypurchases 15,000 units of Part X from Division A for Php12 each. Division B has beenapproached by an outside supplier that is willing to supply the parts needed.Assume that the outside supplier offered to supply each unit for Php10 each, which is correct?A. Division B profit will increase by Php15,000B. ABC Corp profit will decrease by Php30,000C. ABC Corp profit will decrease by Php60,000D. Division A profit will decrease by Php15,000

Variable cost means the cost which vary with the level of output and fixed cost means the cost which…

Answered: 45. Division A of ABC Corp. sells…

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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Lakeside Inc. produces a product that currently sells for $72.00 per unit. Current production costs per unit include direct materials, $19; direct labor, $21; variable overhead, $9.50; and fixed overhead, $9.50. Product engineering has determined that certain production changes could refine the product quality and functionality. These new production changes would increase material and labor costs by 20% per unit. Lakeside has received an offer from a nonprofit organization to buy 8,900 units at $50.20 per unit. Lakeside currently has unused production capacity. Required: a. Calculate the effect on Lakeside's operating income of accepting the order from the nonprofit organization. Increase in operating income b. Should Lakeside accept this special sales order? O Yes O No
Company A manufactures two products A and B that sells for 120 € and 80 € respectively. Each product uses only one type of raw materials that costs € 6 per kilogram. The company has the capacity to annually produce 100,000 units of each product. The company considers its traceable fixed mahufacturing overhead to be avoidable and its common fixed expenses are unavoidable and have been allocated to products based on sales in euros. The Company's average cost per unit for each product at the annual level of activity is provided in the table. Items Product costs in euro A B Direct materials 30 12 Direct labor 20 15 Variable manufacturing overhead 7 5 Traceable fixed manufacturing overhead 16 18 Variable selling expenses 12 8 Common fixed expenses 15 10 Total costs per unit 100 68 (Answer each question independently unless instructed otherwise) Calculate what is the company's total amount of common fixed expenses.
Division Y has asked Division X of the same company to supply it with 9,000 units of part L763 this year to use in one of its products. Division Y has received a bid from an outside supplier for the parts at a price of $53 per unit. Division X has the capacity to produce 36,000 units of part L763 per year. Division X expects to sell 32,400 units of part L763 to outside customers this year at a price of $58.00 per unit. To fill the order from Division Y, Division X would have to cut back its sales to outside customers. Division X produces part L763 at a varlable cost of $45 per unit. The cost of packing and shipping the parts for outside customers is $2 per unit. These packing and shipping costs would not have to be incurred on sales of the parts to Division Y. Required: a. What is the range of transfer prices within which both the Divisions' profits would increase as a result of agreeing to the transfer of 9,000 parts this year from Division X to Division Y? (Round your final answers…
8.2)
Teh Teratai Sdn. Bhd. involved in making and distributing its herbal tea product, Hebat inBandar Tengah. Its annual fixed cost is RM162,000, where RM130, 000 is for theadministration and distribution effort involved in selling the products. The sales manager istargeting a total of 35, 000 boxes would be sold per year. The variable cost for processing isRM2 per box and its variables sales expense is 30 percent of the selling price. There will beno administrative cost incurred. The management is targeting a profit of RM160, 000 for thecurrent year. (a) Based on the above information, determine the selling price of one box of Hebat. (b) There are several reasons for cost - based approach of a product to become popular andimportant in pricing decision. Discuss these reasons.
Rapid Industries has multiple divisions. One division, Iron Products, makes a component that another division, Austin, is currently purchasing on the open market. Iron Products currently has a capacity to produce 505,000 components at a variable cost of $5.50 and a full cost of $9.00. Iron Products has outside sales of 460,000 components at a price of $13.50 per unit. Austin currently purchases 55,000 units from an outside supplier at a price of $11.50 per unit. Assume that Austin desires to use a single supplier for its component. a. What will be the effect on Rapid Industries operating profit if the transfer is made internally? Assume the 55,000 units Austin needs are either purchased 100% internally or 100% externally b. What is the minimum transfer price? (Round your answer to 2 decimal places.) Minimum Transfer Price c. What is the maximum transfer price? (Round your answer to 2 decimal places.) Maximum Transfer Price 47
Company A manufactures two products A and B that sells for 120€ and 80€ respectively. Each product uses only one type of raw materials that costs 6€ per kilogram. The company has the capacity to annually produce 100000 units of each product. The company considers its traceable fixed mahufacturing overhead to be avoidable and its common fixed expenses are unavoidable and have been allocated to products based on sales in euros. Company's average cost per unit for each product at annual level of activity is provided in the table. Items Product costs in euro A B Direct materials 30 12 Direct labour 20 15 Variable manufacturing overhead 7 5 Traceable fixed manufacturing overhead 16 18 Variable selling expenses 12 8 Common fixed expenses 15 10 Total costs per unit 100 68 (Answer each question independently unless instructed otherwise) Assume that Company normally produces and sells 40000 units of product B per year. Evaluate, what is the financial advantage…
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Western Jeans Co. has an annual plant capacity of 2,000,000 units, and current production is 1,920,000 units. Monthly fixed costs are $400,000, and variable costs are $9 per unit. The present selling price is $15 per unit. On July 6 of the current year, the company received an offer from Childs Company for 50,000 units of the product at $13 each. Childs Company will market the units in a foreign country under its own brand name. The additional business is not expected to affect the domestic selling price or quantity of sales of Western Jeans Co. Question Content Area a. Prepare a differential analysis dated July 6 on whether to reject (Alternative 1) or accept (Alternative 2) the Childs order. If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Differential AnalysisReject (Alt. 1) or Accept (Alt. 2) OrderJuly 6 Line Item Description Reject Order(Alternative 1) Accept Order(Alternative 2) Differential Effects(Alternative 2) Revenues $Revenues…
Company A manufactures two products A and B that sells for 120€ and 80€ respectively. Each product uses only one type of raw materials that costs 6€ per kilogram. The company has the capacity to annually produce 100000 units of each product. The company considers its traceable fixed mahufacturing overhead to be avoidable and its common fixed expenses are unavoidable and have been allocated to products based on sales in euros. Company's average cost per unit for each product at annual level of activity is provided in the table. Items Product costs in euro A B Direct materials 30 12 Direct labour 20 15 Variable manufacturing overhead 7 5 Traceable fixed manufacturing overhead 16 18 Variable selling expenses 12 8 Common fixed expenses 15 10 Total costs per unit 100 68 (Answer each question independently unless instructed otherwise) Calculate, what contribution margin per kilogram of raw material is earned by product A.
Company A manufactures two products A and B that sells for 120€ and 80€ respectively. Each product uses only one type of raw materials that costs 6€ per kilogram. The company has the capacity to annually produce 100000 units of each product. The company considers its traceable fixed mahufacturing overhead to be avoidable and its common fixed expenses are unavoidable and have been allocated to products based on sales in euros. Company's average cost per unit for each product at annual level of activity is provided in the table. Items Product costs in euro A B Direct materials 30 12 Direct labour 20 15 Variable manufacturing overhead 7 5 Traceable fixed manufacturing overhead 16 18 Variable selling expenses 12 8 Common fixed expenses 15 10 Total costs per unit 100 68 (Answer each question independently unless instructed otherwise) Calculate, how many kilograms of raw material are needed to make one unit of product B.
25. Arturito Company was approached by the Jordan Brand to purchase 10,000 pairs of shoes for P550. The company currently operates at 45,000 pairs. The maximum capacity of Arturito is 50,000 pairs. If arturito will accept the order, it will need to stop some of their operations. The shoes normally sell for P600. Costs pertaining to the production are as follows: Manufacturing costs are as follows: Direct material per unit P200 Direct labor per unit 180 Variable overhead per unit 50 Fixed overhead per unit 30 Period costs are as follows: Variable selling costs P20 per unit Fixed administrative costs 450,000 If the company will accept the order: It will not incur any selling costs. Variable overhead of P12 per unit will not be incurred. Exportation costs of P150,000 will be incurred. If Arturito will accept the special order, what is the…

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