Homework Help is Here – Start Your Trial Now!
Business
Accounting
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 $48. (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 $17 per pair at 101,000 units.           Stitching's costs per pair of shoes are:                Direct materials                        $11                Direct labor                                  $9                Variable overhead                      $7                Division fixed costs                    $5           Polishing's costs per completed pair of shoes are:                Direct materials                        $20                Direct labor                                  $9                Variable overhead                      $8                Division fixed costs                 $18   What is the market-based transfer price per pair of shoes from the Stitching Division to the Polishing Division? A) $23 B) $36 C) $48 D) $59

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 $48. (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 $17 per pair at 101,000 units.           Stitching's costs per pair of shoes are:                Direct materials                        $11                Direct labor                                  $9                Variable overhead                      $7                Division fixed costs                    $5           Polishing's costs per completed pair of shoes are:                Direct materials                        $20                Direct labor                                  $9                Variable overhead                      $8                Division fixed costs                 $18   What is the market-based transfer price per pair of shoes from the Stitching Division to the Polishing Division? A) $23 B) $36 C) $48 D) $59

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
  1. 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 $48. (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 $17 per pair at 101,000 units.

 

        Stitching's costs per pair of shoes are:

               Direct materials                        $11

               Direct labor                                  $9

               Variable overhead                      $7

               Division fixed costs                    $5

 

        Polishing's costs per completed pair of shoes are:

               Direct materials                        $20

               Direct labor                                  $9

               Variable overhead                      $8

               Division fixed costs                 $18

 

What is the market-based transfer price per pair of shoes from the Stitching Division to the Polishing Division?

  1. A) $23
  2. B) $36
  3. C) $48
  4. D) $59
Expert Solution
steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS