Division X makes a part with the following characteristics: Production capacity 25,000 units $ 18 :37 Selling price to outside customers. Variable cost per unit Fixed costs, total $ 11 $ 100,000 Division Y of the same company would like to purchase 10,000 units each period from Division X. Division Y now purchases the part at a price of $17 each. Suppose Division X has sufficient excess capacity to handle all of Division Y's needs without any increase in fi: cutting into sales to outside customers. If Division X refuses to accept the $17 price internally and Division Y continues to buy from th company as a whole will be: Multiple Choice О worse off by $70,000 each period. О better off by $10,000 each period. О worse off by $60,000 each period. О worse off by $20,000 each period.

Division X makes a part with the following characteristics: Production capacity 25,000 units $ 18 :37 Selling price to outside customers. Variable cost per unit Fixed costs, total $ 11 $ 100,000 Division Y of the same company would like to purchase 10,000 units each period from Division X. Division Y now purchases the part at a price of $17 each. Suppose Division X has sufficient excess capacity to handle all of Division Y's needs without any increase in fi: cutting into sales to outside customers. If Division X refuses to accept the $17 price internally and Division Y continues to buy from th company as a whole will be: Multiple Choice О worse off by $70,000 each period. О better off by $10,000 each period. О worse off by $60,000 each period. О worse off by $20,000 each period.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 10E: Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22...

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Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22 each in the coming year. Total variable costs equal 1,086,800. Total fixed costs equal 8,000,000. (Round all ratios to four significant digits, and round all dollar amounts to the nearest dollar.) Required: 1. What is the contribution margin per unit? What is the contribution margin ratio? 2. Calculate the sales revenue needed to break even. 3. Calculate the sales revenue needed to achieve a target profit of 245,000. 4. What if the average price per unit increased to 23.50? Recalculate: a. Contribution margin per unit b. Contribution margin ratio (rounded to four decimal places) c. Sales revenue needed to break even d. Sales revenue needed to achieve a target profit of 245,000
Morris Industries manufactures and sells three products (AA, BB, and CC). The sales price and unit variable cost for the three products are as follows: Their sales mix s reflected as a ratio of 5:3:2. Annual fixed costs shared by the three products are $25,000 per year. What are total variable costs for Morris with their current product mix? Calculate the number of units of each product that will need to be sold in order for Morris to break even. What is their break-even point in sales dollars? Using an income statement format, prove that this is the break-even point.
Division X makes a part with the following characteristics: Production capacity.. 25,000 units $18 Selling price to outside customers. Variable cost per unit. $11 Fixed cost, total. $100,000 Division Y of the same company would like to purchase 10,000 units each period from Division X. Division Y now purchases the part from an outside supplier at a price of $17 each. Suppose that Division X is operating at capacity and can sell all of its output to outside customers. If Division X sells the parts to Division Y at $17 per unit, the company as a whole will be: Select one: a. better off by $10,000 each period. b. worse off by $20,000 each period. C. worse off by $10,000 each period. d. There will be no change in the status of the company as a whole.
Division X makes a part with the following characteristics: Production capacity 25,000 units Selling price to outside customers $18 Variable cost per unit $11 Fixed costs, total $100,000 Division Y of the same company would like to purchase 10,000 units each period from Division X. Division Y now purchases the part from an outside supplier at a price of $17 each. Suppose Division X has sufficient excess capacity to handle all of Division Y's needs without any increase in fixed costs and without cutting into sales to outside customers. If Division X refuses to accept the $17 price internally and Division Y continues to buy from the outside supplier, the company as a whole will be: better off by $60,000 each period. O worse off by $60,000 each period. worse off by $70,000 each period. better off by $10,000 each period. worse off by $20,000 each period. O O O O <
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1. The Selling Division’s unit sales price is P20 and its unit variable cost is P8. Its capacity is 10,000 units. Fixed costs per unit are P4. Current outside sales is 10,000 units. What is the minimum transfer price that the Selling Division would be willing to accept if 3,000 units will be sold to the Purchasing Division? Assume that the Purchasing Division can buy the same from outside market at P18.50. _____________________2. The Selling Division’s unit sales price is P20 and its unit variable cost is P8. Its capacity is 10,000 units. Fixed costs per unit are P4. Current outside sales are 7,000 units. What is the Selling Division’s opportunity cost per unit from selling 3,000 units to the Purchasing Division? Assume that the Purchasing Division can buy the same from outside market at P18.50 ______________________3. The Selling Division’s unit sales price is P20 and its unit variable cost is P8. Its capacity is 10,000 units. Fixed costs per unit are P4. Current outside sales is…
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