Dual Transfer Pricing The Greek Company has two divisions, Beta and Gamma. Gamma Division produces a product at a variable cost of $6 per unit, and sells 140,000 units to outside customers at $10 per unit and 50,000 units to Beta Division at variable cost plus 40 percent. Under the dual transfer price system, Beta Division pays only the variable cost per unit. Gamma Division's fixed costs are $240,000 per year. Beta Division sells its finished product to outside customers at $22 per unit. Beta has variable costs of $5 per unit, in addition to the costs from Gamma Division. Beta Division's annual fixed costs are $150,000. There are no beginning or ending inventories. (a) Prepare the income statements for the two divisions and the company as a whole. Do not use negative signs with your answers. Greek Company Divisional Income Statement Sales: External Internal. Total Variable costs: Incurred Transferred in Total Contribution margin Fixed costs Net income Beta Gamma Company $Answer $Answer $Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer $Answer $Answer $Answer

Dual Transfer Pricing The Greek Company has two divisions, Beta and Gamma. Gamma Division produces a product at a variable cost of $6 per unit, and sells 140,000 units to outside customers at $10 per unit and 50,000 units to Beta Division at variable cost plus 40 percent. Under the dual transfer price system, Beta Division pays only the variable cost per unit. Gamma Division's fixed costs are $240,000 per year. Beta Division sells its finished product to outside customers at $22 per unit. Beta has variable costs of $5 per unit, in addition to the costs from Gamma Division. Beta Division's annual fixed costs are $150,000. There are no beginning or ending inventories. (a) Prepare the income statements for the two divisions and the company as a whole. Do not use negative signs with your answers. Greek Company Divisional Income Statement Sales: External Internal. Total Variable costs: Incurred Transferred in Total Contribution margin Fixed costs Net income Beta Gamma Company $Answer $Answer $Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer $Answer $Answer $Answer

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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