Homework Help is Here – Start Your Trial Now!
Business
Accounting
gross margin for FPD if it accepted the transfer price

gross margin for FPD if it accepted the transfer price

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

1. What would be the gross margin for FPD if it accepted the transfer price that will be charged by CD?

 

MLBB Co. operates a Component Division (CD) and Finished Product Division (FPD). Cd's annual data is shown below: Sales - external market (40,000 units x P15) Variable costs Contribution margin Fixed costs Profit P600,000 400,000 P200,000 100,000 P100.000 The normal capacity of CD is 50,000 units. FPD needs 10,000 parts that CD can produce at the same variable cost per unit but will change FPD full absorption cost. FPD will process these parts at a cost of P10 per unit and would be sold to outside customers at P26. FPD's fixed costs are P30,000.
Transcribed Image Text:MLBB Co. operates a Component Division (CD) and Finished Product Division (FPD). Cd's annual data is shown below: Sales - external market (40,000 units x P15) Variable costs Contribution margin Fixed costs Profit P600,000 400,000 P200,000 100,000 P100.000 The normal capacity of CD is 50,000 units. FPD needs 10,000 parts that CD can produce at the same variable cost per unit but will change FPD full absorption cost. FPD will process these parts at a cost of P10 per unit and would be sold to outside customers at P26. FPD's fixed costs are P30,000.
Expert Solution
steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Transfer Pricing
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS