Profits centers J and T are two decentralized profit centers of cool cat - candy company. Profit centre J manufactures the candy and profit centre T packages and distributes the candy at a sale price of Rs. 15 per unit. Profit centre J transfers60% (24,00,000 units) of its output to profit centre T. The remainder being sold to outside markets. Following are the expected revenues for the year 2018 Sales Profit centre J Profit centre T 40,00, 000 Units All units received from J Variable costs Rs. 2 per unit Rs. 5 per unit Fixed costs annual Rs. 80,000 Rs. 40.000* Outside market price Rs. 7 per unit Rs. 15 per unit *does not include cost from profit centre J. Required: Calculate transfer price under each of the following transfer pricingmethods: 1. cost (using variable cost) 2. Cost (using full cost) 3. Cost plus using a mark- up on full cost of 40% 4. Market price, when the market price for profit centre J's product is Rs. 7 per unit. 5. Negotiated Transfer price 6. Dual TransferPricing system

Transfer price refers to the value assigned to goods or services transferred between different…

Answered: methods: 1. cost (using variable cost)…

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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Use the below table to answer the following questions. Selling Price = $43.00 Fixed Cost $47,200 47, 200 47,200 57, 200 57, 200 57, 200 67,200 67,200 67,200 Required Variable Cost 15 16 17 15 16 17 15 16 17 2,200 $14,400 12, 200 10,000 4,400 2,200 (5,600) (7,800) (10,000) 3,200 $42,400 39, 200 36,000 32,400 29, 200 26,000 22,400 19, 200 16,000 Sales Volume 4,200 Profitability $70,400 66, 200 62,000 60,400 56,200 52,000 50,400 46, 200 42,000 5,200 $98,400 93,200 88,000 88,400 83,200 78,000 78,400 73,200 68,000 6, 200 $126,400 120, 200 114,000 116,400 110, 200 104,000 106,400 100, 200 94,000 a. Determine the sales volume, fixed cost, and variable cost per unit at the break-even point. b. Determine the expected profit if Franklin projects the following data for Delatine: sales, 4,200 bottles; fixed cost, $47,200; and variable cost per unit, $17. c. Franklin is considering new circumstances that would change the conditions described in Requirement b. Specifically, the company has an…
Requirements Dialog content starts 1. Allocate revenue from the sale of each unit of Dynamic Duo to Smarty and Sublime using the following: a. The stand-alone revenue-allocation method based on selling price of each product b. The incremental revenue-allocation method, with Smarty ranked as the primary product c. The incremental revenue-allocation method, with Sublime ranked as the primary product d. The Shapley value method 2. Of the four methods in requirement 1, which one would you recommend for allocating Paris's revenues to Smarty and Sublime? Explain.
(a) What is the gross margin now? (b) What is the net operating income now? (c) What is the contribution margin now?
1. What would be the gross margin for FPD if it accepted the transfer price that will be charged by CD?
Contribution Margin, Break-Even Sales, Cost-Volume-Profit Chart, Margin of Safety, and Operating Leverage Belmain Co. expects to maintain the same inventories at the end of 20Y7 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows: Estimated Estimated Variable Cost Fixed Cost (per unit sold) Production costs: Direct materials $50.00 Direct labor 30.00 Factory overhead $350,000 6.00 Selling expenses: Sales salaries and commissions 340,000 4.00 Advertising 116,000 Travel 4,000 Miscellaneous selling expense 2,300 1.00 Administrative expenses: Office and officers' salaries 325,000 Supplies 6,000 4.00 Miscellaneous administrative expense 8,700 1.00 Total $1,152,000 $96.00 It is expected that 12,000 units will be sold at a price…
Consider the following: (Click the icon to view the cases.) Requirement 1. Fill in the blanks for each of the independent cases. (a) Selling Price (b) (c) (d) (e) (f) Variable Cost Total Total Contribution Total Fixed Case per Unit per Unit Units Sold Margin Costs Net Income 12345 £ 25 128,000 £ 1,024,000 £ 953,000 13 4 100.000 823,000 22 13 243,000 13,000 29 23 65,000 25,000 12 80.000 240,000 192,000
H
Using the formula in the text, if the lowest acceptable transfer price from the viewpoint of the selling division is $95 and the opportunity cost per unit on outside sales is $38, then the variable cost per unit must be:

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methods: 1. cost (using variable cost) 2. Cost (using full cost) 3. Cost plus using a mark-up on full cost of 40 % 4. Market price, when the market price for profit centre J's product is Rs. 7 per unit. 5. Negotiated Transfer price 6. Dual Transfer Pricing system