Flash E−Card Manufacturing manufactures software parts for the computer software systems that produce e−cards. The Flash II part is currently manufactured in the Computer Department. The Data Department also produces the part, and the plant has excess capacity to produce the Flash II part. The current market price of the Flash II part is $900. The managerial accountant reported the following manufacturing costs and variable expense data: Flash E−Card Manufacturing Manufacturing Costs and Variable Expense Report Flash Component Direct materials $860 Direct labor $110 Variable manufacturing overhead $150 Fixed manufacturing overhead (current production level) $145 Variable selling expenses (only incurred on sales to outside consumers) $118 If the highest acceptable transfer price is $900 in the market, what is the lowest acceptable in−house price the Data Department should receive to produce the part in−house at the ComputerDepartment?
Flash E−Card Manufacturing manufactures software parts for the computer software systems that produce e−cards. The Flash II part is currently manufactured in the Computer Department. The Data Department also produces the part, and the plant has excess capacity to produce the Flash II part. The current market price of the Flash II part is $900. The
Flash
E−Card
Manufacturing
Manufacturing Costs and Variable Expense Report
Flash Component
|
Direct materials |
$860 |
|
Direct labor |
$110 |
|
Variable manufacturing |
$150 |
|
Fixed manufacturing overhead (current production level) |
$145 |
|
Variable selling expenses (only incurred on sales to outside consumers) |
$118 |
If the highest acceptable transfer price is $900 in the market, what is the lowest acceptable in−house price the Data Department should receive to produce the part in−house at the ComputerDepartment?
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