Hu Corporation has two operating divisions, A and B. The following information is provided for Division A: Unit selling price $200 Unit variable $120 costs Unit fixed costs $ 40 Division B uses the type of product produced by Division A and has approached Division A about buying the product internally. Division B is currently paying $180 to purchase the product from an outside source. If Division A sells internally, it can save $5 per unit in variable costs. Assuming Division A is operating at capacity, what price should it charge Division B if the transfer is to be made? Multiple Choice $115 $195 $125 $200
Hu Corporation has two operating divisions, A and B. The following information is provided for Division A: Unit selling price $200 Unit variable $120 costs Unit fixed costs $ 40 Division B uses the type of product produced by Division A and has approached Division A about buying the product internally. Division B is currently paying $180 to purchase the product from an outside source. If Division A sells internally, it can save $5 per unit in variable costs. Assuming Division A is operating at capacity, what price should it charge Division B if the transfer is to be made? Multiple Choice $115 $195 $125 $200
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter10: Evaluating Decentralized Operations
Section: Chapter Questions
Problem 17E: Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside...
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![Hu Corporation has two operating divisions, A and B. The following information is provided for Division A:
Unit selling price $200
Unit variable
$120
costs
Unit fixed costs
$ 40
Division B uses the type of product produced by Division A and has approached Division A about buying the product internally. Division B is currently paying $180 to purchase the product from an outside source. If Division A sells internally, it can
save $5 per unit in variable costs. Assuming Division A is operating at capacity, what price should it charge Division B if the transfer is to be made?
Multiple Choice
$115
$195
$125
$200](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F06b13176-f1c7-4f2c-8e34-914e2de9d27f%2F4187c1d2-680f-49bf-85db-aa54f635b413%2Fi5ruhfy_processed.png&w=3840&q=75)
Transcribed Image Text:Hu Corporation has two operating divisions, A and B. The following information is provided for Division A:
Unit selling price $200
Unit variable
$120
costs
Unit fixed costs
$ 40
Division B uses the type of product produced by Division A and has approached Division A about buying the product internally. Division B is currently paying $180 to purchase the product from an outside source. If Division A sells internally, it can
save $5 per unit in variable costs. Assuming Division A is operating at capacity, what price should it charge Division B if the transfer is to be made?
Multiple Choice
$115
$195
$125
$200
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