Concord 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 Hook Division $0.50 $0.75 $0.95 1,900 1,200 700 Backpack Division $18.00 $23.00 $43.00 700 700 N/A
Concord 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 Hook Division $0.50 $0.75 $0.95 1,900 1,200 700 Backpack Division $18.00 $23.00 $43.00 700 700 N/A
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Concord 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
Hook Division
$0.50
$0.75
$0.95
1,900
1,200
700
Backpack Division
$18.00
$23.00
$43.00
700
700
N/A
Transcribed Image Text:(a)
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 transactions)?
Gross margin $
Hook division
eTextbook and Media
Backpack division
Total
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