1. What is the operating profit earned by the three products for one quarter?2. Should the division process Product Alpha further or sell it at split-off?What is the effect of the decision on quarterly operating profit?equipment costing P15,400 per quarter. Additional materials and labor alsoThe revenues from each product are as follows: Alpha, P100,000; Beta,process Alpha further means that the company must rent some specialManagement is considering processing Alpha beyond the split-off point,which would increase the sales values of Alpha to P120,000. However, toProblem 17 (Sell or Process Further; Basic Analysis)SHE, Inc., produces three products (Alpha, Beta, and Gamma) from acommon input. The joint costs for a typical quarter follow:Direct materialsDirect laborOverheadP500,00036,00072,000The revenues from each product are as follows: Alpha, P100,000; Bete.P93,000; and Gamma, P30,000.Management is considering processing Alpha beyond the split-off pooequipment costing P15,400 per quarter. Additional materials and laborneeded would cost P8,500 per quarter.Required:1.2. Should the division process Product Alpha further or sell it atWhat is the effect of the decision on quarterly operating profit?

solution requirement 1 calculation of operating profit earned by three products for one quarter…

her; Basic Analysis) SHE, Inc., produces three products (Alpha, Beta, and Gamma) common input. The joint costs for a typical quarter follow: Direct materials Direct labor Overhead P500,000 36,000 72,000 The revenues from each product are as follows: Alpha, P100,0 P93,000; and Gamma, P30,000. Management is considering processing Alpha beyond the split-c which would increase the sales vol

her; Basic Analysis) SHE, Inc., produces three products (Alpha, Beta, and Gamma) common input. The joint costs for a typical quarter follow: Direct materials Direct labor Overhead P500,000 36,000 72,000 The revenues from each product are as follows: Alpha, P100,0 P93,000; and Gamma, P30,000. Management is considering processing Alpha beyond the split-c which would increase the sales vol

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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Assume a company has two divisions, Division C and Division D. Division C has provided the following information regarding the one product that it manufactures and sells on the outside market: Selling price per unit (on the outside market) $ 60 Variable cost per unit $ 44 Fixed costs per unit (based on capacity) $ 8 Capacity in units 20,000 Division D could use Division C’s product as a component part in the manufacture of 4,000 units of its own newly-designed product. Division D has received a quote of $58 from an outside supplier for a component part that is comparable to the one that Division C makes. If the company’s divisional managers are evaluated based on their division’s profits and Division C is currently selling 15,000 units on the outside market, what is Division C’s lowest acceptable transfer price if it were to sell 4,000 units to Division D?
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