Please answer with working+ formula 99Avery Company has two divisions, Polk and Bishop. Polk produces an item that Bishop could use in its production. Bishop currently ispurchasing 24,000 units from an outside supplier for $14.00 per unit. Polk is currently operating at less than its full capacity of 620,000units and has variable costs of $6.00 per unit. The full cost to manufacture the unit is $10. Polk currently sells 460,000 units at a sellingprice of $19 per unit.Required:a. What will be the effect on Avery Company's operating profit If the transfer is made internally?b. What is the minimum transfer price from Polk's perspective?c. What is the maximum transfer price from Bishop's perspective?Complete this question by entering your answers in the tabs below.。Required ARequired BRequired CWhat will be the effect on Avery Company's operating profit if the transfer is made internally?

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Answered: 9 9 Avery Company has two divisions,…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 4EB: Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all...

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Oat Treats manufactures various types of cereal bars featuring oats. Simmons Cereal Company has approached Oat Treats with a proposal to sell the company its top selling oat cereal bar at a price of $27,500 for 20,000 bars. The costs shown are associated with production of 20,000 oat bars currently. The manufacturing overhead consists of $3,000 of variable costs with the balance being allocated to fixed costs. Should Oat Treats make or buy the oat bars?
Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all 30,000 for $240 each. Country Enterprises has approached Dimitri to buy 800 chairs for $210 each. Dimitris normal variable cost is $165 per chair, including $50 per unit in direct labor per chair. Dimitri can produce the special order on an overtime shift, which means that direct labor would be paid overtime at 150% of the normal pay rate. The annual fixed costs will be unaffected by the special order and the contract will not disrupt any of Dimitris other operations. What will be the impact on profits of accepting the order?
Avery Company has two divisions, Polk and Bishop. Polk produces an item that Bishop could use in its production. Bishop currently is purchasing 26,000 units from an outside supplier for $16 per unit. Polk is currently operating at less than its fll capacity of 580,000 units and has variable costs of $8 per unit. The full cost to manufacture the unit is $11. Polk currently sells 460,000 units at a selling price of $19 per unit. a. What will be the effect on Avery Company's operating profit if the transfer is made internally? b. What is the minimum transfer price from Polk's perspective? Minimum Transfer Price
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