Elba Division of Haimes Industries manufactures product # 54B89. Three-fourths of the production is transferred to the Crete Division of Haimes Industries; the remainder is sold externally for $67 per unit. The following information is available about product #54B89: Total production annually Variable production costs Variable selling costs (includes $4 per unit in advertising cost) Fixed overhead (allocated on the basis of units of production) $2,160,000 Fixed selling costs $2,880,000 1,200,000 units $40 $16 Determine the transfer price under each of the following methods: (1) total variable cost $ (2) full production cost $ (3) total variable production cost plus allocated fixed selling costs $ (4) market price $ 56 per unit 48 x per unit 48 x per unit 67 per unit
Elba Division of Haimes Industries manufactures product # 54B89. Three-fourths of the production is transferred to the Crete Division of Haimes Industries; the remainder is sold externally for $67 per unit. The following information is available about product #54B89: Total production annually Variable production costs Variable selling costs (includes $4 per unit in advertising cost) Fixed overhead (allocated on the basis of units of production) $2,160,000 Fixed selling costs $2,880,000 1,200,000 units $40 $16 Determine the transfer price under each of the following methods: (1) total variable cost $ (2) full production cost $ (3) total variable production cost plus allocated fixed selling costs $ (4) market price $ 56 per unit 48 x per unit 48 x per unit 67 per unit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Subject : Accounting
Transcribed Image Text:Transfer pricing
Elba Division of Haimes Industries manufactures product # 54B89. Three-fourths of the
production is transferred to the Crete Division of Haimes Industries; the remainder is sold
externally for $67 per unit. The following information is available about product #54B89:
Total production annually
Variable production costs
Variable selling costs (includes $4 per unit in advertising cost)
Fixed overhead (allocated on the basis of units of production) $2,160,000
Fixed selling costs
$2,880,000
1,200,000 units
$40
$16
Determine the transfer price under each of the following methods:
(1) total variable cost
$
(2) full production cost
$
(3) total variable production cost plus allocated fixed selling costs $
(4) market price
$
Check
56
per unit
48 x
per unit
48 x per unit
67
per unit
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