cussionsQuestion 7-/1ferencesView PoliciesaborationsCurrent Attempt in ProgresseyPLUS SupportThe Plastics Division of Weston Company manufactures plasticmolds and then sells them to customers for $70 per unit. ItsL Centralvariable cost is $30 per unit, and its fixed cost per unit is $10.Management would like the Plastics Division to transfer 10,000 ofthese molds to another division within the company at a price of$40. The Plastics Division has excess capacity of 10,000 units forplastic moldings. What is the minimum transfer price that thePlastics Division should accept?fice 365dgesazzaO $40.O $30.$10.$70.8:43 PM11/18/2019Chpninsprt schomenoendpg updelete44backspacelockPhome

Transfer pricing: It refers to the pricing strategy of the product which is transferred within the…

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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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Exercise 11-7 (Algo) Transfer Pricing from the Viewpoint of the Entire Company (LO11-3] Division A manufactures electronic circuit boards that can be sold to Division B of the same company or to outside customers. Last year, the following activity occurred in Division A: Selling price per circuit board Variable cost per circuit board Number of circuit boards: Produced during the year Sold to outside customers Sold to Division B $ 189 $ 120 20,300 14,500 5,800 Sales to Division B were at the same price as sales to outside customers. The circuit boards purchased by Division B were used in an electronic instrument manufactured by that division (one board per instrument). Division B incurred $300 in additional variable cost per instrument and then sold the instruments for $690 each. Required: 1. Calculate the net operating incomes earned by Division A, Division B, and the company as a whole. 2. Assume Division A's manufacturing capacity is 20,300 circuit boards. Next year, Division B wants…
D% A company has three products-Beta, Chi, and Delta-that emerge from a joint process. The selling prices and amount of output for each product at the split-off point are as follows: Amount of Selling Price Output 14,000 pounds 18,000 pounds 19,000 pounds apse Product Beta $33 per pound points Chi $29 per pound Delta $24 per pound 8 00:36:54 Each product can be processed further beyond the split-off point. The additional processing costs for each product and their respective selling prices after further processing are as follows: Additional Selling Price $37 per pound $34 per pound $30 per pound Product Processing Costs $65,000 Beta Chi $75,500 Delta $70,000 What is financial advantage (disadvantage) of further processing Product Chi?
Target Costing Laser Cast Inc. manufactures color laser printers. Model J20 presently sells for $150 and has a product cost of $120, as follows: Direct materials $90 Direct labor 20 Factory overhead 10 Total $120 It is estimated that the competitive selling price for color laser printers of this type will drop to $140 next year. Laser Cast has established a target cost to maintain its historical markup percentage on product cost. Engineers have provided the following cost-reduction ideas: 1. Purchase a plastic printer cover with snap-on assembly, rather than with screws. This will reduce the amount of direct labor by 9 minutes per unit. 2. Add an inspection step that will add six minutes per unit of direct labor but reduce the materials cost by $3 per unit. 3. Decrease the cycle time of the injection molding machine from four minutes to three minutes per part. Thirty percent of the direct labor and 42% of the factory overhead are related to running injection molding machines. The…
11
Diversified Products, Inc., has recently acquired a small publishing company that Diversified eOBLEM 13-28 Basic Segment Reporting; Activity-Based Cost Assignment [LO1] Ddacts intends to operate as one of its investment centers. The newly acquired company us three books that it offers for sale-a cookbook, a travel guide, and a handy speller. Cech book sells for $10. The publishing company's most recent monthly income statement is given below: Product Line Total Travel Guide Handy Speller Company Cookbook Sales $300,000 $90,000 $150,000 $60,000 Expenses: Printing costs Advertising . General sales. Salaries Equipment depreciation Sales commissions General administration. 102,000 36,000 27,000 63,000 19,500 9,000 9,000 12,000 13,500 5,400 18,000 3,000 9,000 14,000 3,000 18,000 3,600 6,000 3,000 6,000 33,000 9,000 3,000 30,000 15,000 14,000 6,000 1,000 42,000 14,000 Warehouse rent 12,000 3,600 2,400 1,000 Depreciation-office facilities 3,000 1,000 Total expenses. 285,000 94,500 139,500…
Exercise 21.12 (Static) Pricing a Special Order (LO21-1, LO21-2, LO21-3) Mazeppa Corporation sells relays at a selling price of $28 per unit. The company's cost per unit, based on full capacity of 160,000 units, is as follows: Direct materials Direct labor Overhead (2/3 of which is variable) Mazeppa has been approached by a distributor in Montana offering to buy a special order consisting of 30,000 relays. Mazeppa has the capacity to fill the order. However, it will incur an additional shipping cost of $2 for each relay it sells to the distributor. a-1. Assume that Mazęppa is currently operating at a level of 100,000 units. Show the calculation for the unit price to charge the distributor which will generate an increase in operating income of $2 per unit? a-2. What is your interpretation of the changes to the contribution margin per unit and the operating income on account of the unit price charged to the distributor? b-1. Assume that Mazeppa is currently operating at full capacity.…
Question Content Area Multiple-Product Break-Even and Target Profit Vandenberg, Inc., produces and sells two products: a ceiling fan and a table fan. Vandenberg plans to sell 40,000 ceiling fans and 70,000 table fans in the coming year. Product price and cost information includes: Ceiling Fan Table Fan Price $62 $14 Unit variable cost $11 $8 Direct fixed cost $25,200 $47,000 Common fixed selling and administrative expenses total $70,000. Required: Question Content Area 1. What is the sales mix estimated for next year (calculated to the lowest whole number for each product)?Sales mix of ceiling fans to table fans = fill in the blank 614f11ff0fb7fcb_1 : fill in the blank 614f11ff0fb7fcb_2 2. Using the sales mix from Requirement 1, form a package of ceiling fans and table fans. How many ceiling fans and table fans are sold at break-even? Round your intermediate calculations and final answers to the nearest whole number.…
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