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company to the Mel Division. The following ered for the coming period: Lyn Division: Сараacity Price per board foot Variable production cost per board foot Variable selling cost per board foot Mel Division: 100,000 board feet P4.00 P2.00 PO.70

company to the Mel Division. The following ered for the coming period: Lyn Division: Сараacity Price per board foot Variable production cost per board foot Variable selling cost per board foot Mel Division: 100,000 board feet P4.00 P2.00 PO.70

FINANCIAL ACCOUNTING
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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gathered for the coming period: outside customers or within the company to the Mel Division. The following data have been 10.18 The Lyn Division of Rosal Homes Inc. produces and sells lumber that can be sold to Lyn Division: Сарacity Price per board foot Variable production cost per board foot Variable selling cost per board foot Mel Division: Board feet needed 100,000 board feet P4.00 P2.00 PO.70 40,000 Outside price paid per board foot Р3.50 Jf the Lyn Division sells to the Mel Division, P0.40 per board foot can be saved in shipping costs. 1. If current outside sales are 50,000 board feet, what is the minimum transfer price that the Lyn Division could accept? 2. If current outside sales are 70,000 board feet, what is the minimum transfer price that the Lyn Division could accept? 3. If Lyn Division has sufficient excess capacity to fulfill the Mel Division's needs, what will be the effect on the company's overall contribution margin? 4. If Lyn Division has sufficient excess capacity to fulfill the Mel Division's needs, what will be the effect on the company's overall contribution margin if the transfer price negotiated is P2.40? 5. If Lyn Division has sufficient excess capacity to fulfill the Mel Division's needs, what will be the effect on the profit of Mel Division if the transfer price negotiated is P2.40? 6. If Lyn Division has sufficient excess capacity to fulfill the Mel Division's needs, what will be the effect on the profit of the company as a whole if the transfer price of P2.40 is change to P2.70? 7. If Lyn Division is operating at capacity, what is the effect on the company's overall contribution margin?
Transcribed Image Text:gathered for the coming period: outside customers or within the company to the Mel Division. The following data have been 10.18 The Lyn Division of Rosal Homes Inc. produces and sells lumber that can be sold to Lyn Division: Сарacity Price per board foot Variable production cost per board foot Variable selling cost per board foot Mel Division: Board feet needed 100,000 board feet P4.00 P2.00 PO.70 40,000 Outside price paid per board foot Р3.50 Jf the Lyn Division sells to the Mel Division, P0.40 per board foot can be saved in shipping costs. 1. If current outside sales are 50,000 board feet, what is the minimum transfer price that the Lyn Division could accept? 2. If current outside sales are 70,000 board feet, what is the minimum transfer price that the Lyn Division could accept? 3. If Lyn Division has sufficient excess capacity to fulfill the Mel Division's needs, what will be the effect on the company's overall contribution margin? 4. If Lyn Division has sufficient excess capacity to fulfill the Mel Division's needs, what will be the effect on the company's overall contribution margin if the transfer price negotiated is P2.40? 5. If Lyn Division has sufficient excess capacity to fulfill the Mel Division's needs, what will be the effect on the profit of Mel Division if the transfer price negotiated is P2.40? 6. If Lyn Division has sufficient excess capacity to fulfill the Mel Division's needs, what will be the effect on the profit of the company as a whole if the transfer price of P2.40 is change to P2.70? 7. If Lyn Division is operating at capacity, what is the effect on the company's overall contribution margin?
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