Branded Shoe Company manufactures only one type of shoe and has two divisions, the Stitching Division and the Polishing Division. The Stitching Division manufactures shoes for the Polishing Division, which completes the shoes and sells them to retailers. The Stitching Division "sells" shoes to the Polishing Division. The market price for the Polishing Division to purchase a pair of shoes is $52. (Ignore changes in inventory.) The fixed costs for the Stitching Division are assumed to be the same over the range of 40,000-101,000 units. The fixed costs for the Polishing Division are assumed to be $22 per pair at 101,000 units. Stitching's costs per pair of shoes are: Direct materials $18 Direct labor $16 Variable overhead $14 Division fixed costs $12 Polishing's costs per completed pair of shoes are: Direct materials $14 Direct labor $7 Variable overhead $8 Division fixed costs $16 What is the transfer price per pair of shoes from the Stitching Division to the Polishing Division if the transfer price per pair of shoes is 120% of full costs? O A. $72.00 B. $40.80 C. $57.60 D. $21.60 …….

Branded Shoe Company manufactures only one type of shoe and has two divisions, the Stitching Division and the Polishing Division. The Stitching Division manufactures shoes for the Polishing Division, which completes the shoes and sells them to retailers. The Stitching Division "sells" shoes to the Polishing Division. The market price for the Polishing Division to purchase a pair of shoes is $52. (Ignore changes in inventory.) The fixed costs for the Stitching Division are assumed to be the same over the range of 40,000-101,000 units. The fixed costs for the Polishing Division are assumed to be $22 per pair at 101,000 units. Stitching's costs per pair of shoes are: Direct materials $18 Direct labor $16 Variable overhead $14 Division fixed costs $12 Polishing's costs per completed pair of shoes are: Direct materials $14 Direct labor $7 Variable overhead $8 Division fixed costs $16 What is the transfer price per pair of shoes from the Stitching Division to the Polishing Division if the transfer price per pair of shoes is 120% of full costs? O A. $72.00 B. $40.80 C. $57.60 D. $21.60 …….

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter18: Pricing And Profitability Analysis

Section: Chapter Questions

Problem 14E: Many different businesses employ markup on cost to arrive at a price. For each of the following...

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Branded Shoe Company manufactures only one type of shoe and has two divisions, the Stitching Division and the Polishing Division. The Stitching Division manufactures shoes for the Polishing Division, which completes the shoes and sells them to retailers. The Stitching Division "sells" shoes to the Polishing Division. The market price for the Polishing Division to purchase a pair of shoes is $52. (Ignore changes in inventory.) The fixed costs for the Stitching Division are assumed to be the same over the range of 40,000-103,000 units. The fixed costs for the Polishing Division are assumed to be $24 per pair at 103,000 units. Stitching's costs per pair of shoes are: Direct materials $20 Direct labor $18 Variable overhead $16 Division fixed costs $14 Polishing's costs per completed pair of shoes are: Direct…
Branded Shoe Company manufactures only one type of shoe and has two divisions, the Stitching Division and the Polishing Division. The Stitching Division manufactures shoes for the Polishing Division, which completes the shoes and sells them to retailers. The Stitching Division "sells" shoes to the Polishing Division. The market price for the Polishing Division to purchase a pair of shoes is $42.00.(Ignore changes in inventory.) The fixed costs for the Stitching Division are assumed to be the same over the range of 40,000−101,000units. The fixed costs for the Polishing Division are assumed to be $19.00per pair at 101,000 units. Stitching's costs per pair of shoes are: Direct materials $15.00 Direct labor $13.00 Variable overhead $11.00 Division fixed costs $9.00 Polishing's costs per completed pair of shoes are: Direct materials $16.00 Direct labor $10.00 Variable overhead $7.00 Division fixed costs $18.00 What is the market−based transfer price per pair of shoes from…
Branded Shoe Company manufactures only one type of shoe and has two divisions, the Stitching Division and the Polishing Division. The Stitching Division manufactures shoes for the Polishing Division, which completes the shoe and sells it to retailers. The Stitching Division "sells" shoes to the Polishing Division. The market price for the Polishing Division to purchase a pair of shoes is $42. (Ignore changes in inventory.) The fixed costs for the Stitching Division are assumed to be the same over the range of 40,000-100,000 units. The fixed costs for the Polishing Division are assumed to be $14 per pair at 100,000 units. Stitching's costs per pair of soles are: Direct materials $10 Direct labor $ 8 Variable overhead $ 6 Division fixed costs $ 4 Polishing's costs per completed pair of shoes are: Direct materials $14…
AZChen Company manufactures one particular type of washing machine and has two divisions, the Compressor Division, and the Fabrication Division. The Compressor Division manufactures compressors for the Fabrication Division, which completes the washing machine and sells it to retailers. The Compressor Division "sells" compressors to the Fabrication Division. The market price for the Fabrication Division to purchase a compressor is $40.00. (Ignore changes in inventory.) The fixed costs for the Compressor and Fabrication Divisions are assumed to be the same over the range of 1,000 - 5,000 units. Compressor's costs per compressor are: Direct materials $15 Direct labour $7.30 Variable overhead $2.69 Division fixed costs $7.48 Fabrication's costs per completed washing machine are: Direct materials $140.00 (excluding the transfer price of the compressor) Direct labour $57.50 Variable overhead $23.00 Division fixed costs $8.00 Assume the transfer price for a compressor is 149% of total costs…
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The AB division sells goods internally to the CD division of the same company. The quoted external price in industry publications from a supplier near AB is P200 per ton plus transportation. It costs P20 per ton to transport the goods to CD. AB’s actual market cost per ton to buy the direct materials to make the transferred product is P100. Actual per ton direct labor is P50. Other actual costs of storage and handling are P40. The company president selects a P220 transfer price. This is an example of: Cost-based transfer pricing. Cost plus 20% transfer pricing. Market-based transfer pricing. Negotiated transfer pricing.
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The Showa Shoe Company has two divisions, Production and Marketing. Production manufactures Showa shoes, which it sells to both the Marketing Division and to other retailers (the latter under a different brand name). Marketing operates several small shoe stores in shopping centers. Marketing sells both Showa and other brands. Relevant facts for Production are as follows:Production is operating far below its capacity. Sales Price to Outsiders $28,50 per pair Variable Cost to Produce $ 18 per pair Fixed Costs $ 100,000 per pair The following data pertain to the sale of Showa shoes by Marketing: Marketing is operating far below its capacity. Sales Price $40 per Pair Variable Marketing Costs $ 1 per pair The company’s variable manufacturing and marketing costs are differential to this decision, while fixedmanufacturing and marketing costs are not.Required:a. What is the type of responsibility center for…
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The Mandalorian Company has two divisions, Production and Marketing. Production manufactures Beskar Head Armour for Knights of the Old Republic, which it sells to both the Marketing Division and to other retailers (the latter under a different brand name). Marketing operates several small armour stores in shopping centers throughout Corruscant. Marketing sells both Beskar Head Armour and other brands. Relevant facts for Production are as follows: Sales Price to Outsiders.............................................................$28.50 per Pcs Variable Cost to Produce...........................................................$18.00 per Pcs Fixed Costs ................................................................................$100,000 per Month The following data pertain to the sale of Mandalorian Company Beskar Head Armour by Marketing: Marketing is operating far below its capacity. Sales…