s Carol Components operates a Production Division and a Packaging Division. Both divisions are evaluated as profit centers. Packagingbuys components from Production and assembles them for sale. Production sells many components to third parties in addition toPackaging. Selected data from the two operations follow:Capacity (units)Sales priceVariable costsbFixed costsProduction50,800$ 256$ 112,$ 30,000,000Packaging25,400$ 796a For Production, this is the price to third parties.For Packaging, this does not include the transfer price paid to Production.a. Optimal transfer priceb. Transfer pricec. Transfer price$ 304$ 18,000,000:Required:a. Current output in Production is 25,400 units. Packaging requests an additional 6,280 units to produce a special order. What transferprice would you recommend?b. Suppose Production is operating at full capacity. What transfer price would you recommend?c. Suppose Production is operating at 47,660 units. What transfer price would you recommend?per unitper unitper unitin !!!

Transfer price methodology are the methods or techniques which are used for determining prices for…

Carol Components operates a Production Division and a Packaging Division. Both divisions are evaluated as profit centers. Packaging buys components from Production and assembles them for sale. Production sells many components to third parties in addition to Packaging. Selected data from the two operations follow: Capacity (units) Sales price Variable costs Fixed costs Production 50,800 $ 256 $ 112 $ 30,000,000 For Production, this is the price to third parties. bFor Packaging, this does not include the transfer price paid to Production. Packaging 25,400 $ 796 $ 304 $ 18,000,000 Required: a. Current output in Production is 25,400 units. Packaging requests an additional 6,280 units to produce a special order. What transfer price would you recommend? a. Optimal transfer price b. Transfer price c. Transfer price b. Suppose Production is operating at full capacity. What transfer price would you recommend? c. Suppose Production is operating at 47,660 units. What transfer price would you recommend? per unit per unit per unit

Carol Components operates a Production Division and a Packaging Division. Both divisions are evaluated as profit centers. Packaging buys components from Production and assembles them for sale. Production sells many components to third parties in addition to Packaging. Selected data from the two operations follow: Capacity (units) Sales price Variable costs Fixed costs Production 50,800 $ 256 $ 112 $ 30,000,000 For Production, this is the price to third parties. bFor Packaging, this does not include the transfer price paid to Production. Packaging 25,400 $ 796 $ 304 $ 18,000,000 Required: a. Current output in Production is 25,400 units. Packaging requests an additional 6,280 units to produce a special order. What transfer price would you recommend? a. Optimal transfer price b. Transfer price c. Transfer price b. Suppose Production is operating at full capacity. What transfer price would you recommend? c. Suppose Production is operating at 47,660 units. What transfer price would you recommend? per unit per unit per unit

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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Question

Carol Components operates a Production Division and a Packaging Division. Both divisions are evaluated as profit centers. Packaging
buys components from Production and assembles them for sale. Production sells many components to third parties in addition to
Packaging. Selected data from the two operations follow:
Capacity (units)
Sales price
Variable costsb
Fixed costs
Production
50,800
$ 256
$ 112,
$ 30,000,000
Packaging
25,400
$ 796
a For Production, this is the price to third parties.
For Packaging, this does not include the transfer price paid to Production.
a. Optimal transfer price
b. Transfer price
c. Transfer price
$ 304
$ 18,000,000:
Required:
a. Current output in Production is 25,400 units. Packaging requests an additional 6,280 units to produce a special order. What transfer
price would you recommend?
b. Suppose Production is operating at full capacity. What transfer price would you recommend?
c. Suppose Production is operating at 47,660 units. What transfer price would you recommend?
per unit
per unit
per unit
in !!!

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Zina Manufacturing Company started and completed Job 501 in December with the following Job Cost Sheet and transferred it to the warehouse. Direct Materials Date Dec 17 Dec 30 Total Direct Labor Amount Date Amount $2,000 Dec 20 $4,000 8,000 Dec 30 3,800 Total Job Cost Sheet - Job No. 501 Total Cost The journal entry to record the transaction is A) WIP Inventory FG Inventory B) Cost of Goods Sold WIP Inventory C) FG Inventory WIP Inventory D) FG Inventory WIP Inventory Debit Credit 35,800 17,800 17,800 Manufacturing Overhead Date Amount Dec 24 $10,000 Dec 30 8,000 Total 35,800 35,800 17,800 17,800 35,800
is thsi correct?
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