Blue Corporation makes backpacks, with a specialty line for baseball players. This backpack has a spot for everything-helmet, spikes. glove, and bats-and it comes with a hook at the top that makes it easy to hang from a chain link fence in the dugout. The backpack division buys the hooks from-you guessed it-the hook division, which has enough capacity to meet both internal and external demand. At present, the hook and backpack divisions have agreed on a transfer price of $0.75 per hook. Current volumes, costs, and prices are listed below for each division for one month. The costs for the backpack division reflect all unit backpack costs, except for the hook. Variable cost per unit Absorption cost per unit Market price per unit Quantity produced Quantity sold externally Quantity sold internally (a) Hook Division x Your answer is incorrect. Gross margin $0.50 $0.75 $0.90 2,100 1,300 800 Hook division Backpack Division According to the information given, how much gross margin would each division report for one month? How much total gross margin would the company report (before eliminating intracompany transactional? 520 $18.00 $21.00 $4800 BOD 800 Backpack division 20000 Total 20520

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Blue Corporation makes backpacks, with a specialty line for baseball players. This backpack has a spot for everything-helmet, spikes.
glove, and bats-and it comes with a hook at the top that makes it easy to hang from a chain link fence in the dugout. The backpack
division buys the hooks from-you guessed it-the hook division, which has enough capacity to meet both internal and external
demand. At present, the hook and backpack divisions have agreed on a transfer price of $0.75 per hook. Current volumes, costs, and
prices are listed below for each division for one month. The casts for the backpack division reflect all unit backpack costs, except for
the hook.
Variable cost per unit
Absorption cost per unit
Market price per unit
Quantity produced
Quantity sold externally
Quantity sold internally
(a)
Hook Division
* Your answer is incorrect.
Gross margin
$0,50
$0.75
$0.90
2,100
1,300
800
According to the information given, how much gross margin would each division report for one month? How much total gross
margin would the company report (before eliminating intracompany transactional?
Hook division
Backpack Division
$18.00
$21.00
$4300
800
800
520
KIZA
Backpack division
20000
Total
20520
Transcribed Image Text:Blue Corporation makes backpacks, with a specialty line for baseball players. This backpack has a spot for everything-helmet, spikes. glove, and bats-and it comes with a hook at the top that makes it easy to hang from a chain link fence in the dugout. The backpack division buys the hooks from-you guessed it-the hook division, which has enough capacity to meet both internal and external demand. At present, the hook and backpack divisions have agreed on a transfer price of $0.75 per hook. Current volumes, costs, and prices are listed below for each division for one month. The casts for the backpack division reflect all unit backpack costs, except for the hook. Variable cost per unit Absorption cost per unit Market price per unit Quantity produced Quantity sold externally Quantity sold internally (a) Hook Division * Your answer is incorrect. Gross margin $0,50 $0.75 $0.90 2,100 1,300 800 According to the information given, how much gross margin would each division report for one month? How much total gross margin would the company report (before eliminating intracompany transactional? Hook division Backpack Division $18.00 $21.00 $4300 800 800 520 KIZA Backpack division 20000 Total 20520
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