NSTSYN867 Company has a Components Division which produces parts for product divisions within the company as well as for outside manufacturers. The company's Business Products Division has asked the Components Division to provide it with a new part, A15. Production data related to A15 are as follows: Units needed by Business Products Division Variable production cost Allocated fixed production cost 20,000 units $31 per unit $3.50 per unit Unfortunately, producing the new part requires the same production team within the Components Division that manufactures another part, X32, for outside customers. Data related to the production and sale of X32 to outside customers are below: Units currently produced & sold Selling price Variable production cost Variable selling cost Allocated fixed production cost 100,000 units $70.00 per unit $52.00 per unit $8.00 per unit $2.00 per unit O. If the NSTSYN867's Components Division must reduce the production of X32 by 18% in order to produce all of the part A15 requested by the Business Products Division, what would be the minimum transfer price they should be willing to accept assuming there would be no impact to their fixed cost? A. $[ per unit

NSTSYN867 Company has a Components Division which produces parts for product divisions within the company as well as for outside manufacturers. The company's Business Products Division has asked the Components Division to provide it with a new part, A15. Production data related to A15 are as follows: Units needed by Business Products Division Variable production cost Allocated fixed production cost 20,000 units $31 per unit $3.50 per unit Unfortunately, producing the new part requires the same production team within the Components Division that manufactures another part, X32, for outside customers. Data related to the production and sale of X32 to outside customers are below: Units currently produced & sold Selling price Variable production cost Variable selling cost Allocated fixed production cost 100,000 units $70.00 per unit $52.00 per unit $8.00 per unit $2.00 per unit O. If the NSTSYN867's Components Division must reduce the production of X32 by 18% in order to produce all of the part A15 requested by the Business Products Division, what would be the minimum transfer price they should be willing to accept assuming there would be no impact to their fixed cost? A. $[ per unit

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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NSTSYN867 Company has a Components Division which produces parts for product divisions within the company as well as for outside manufacturers. The company's Business Products Division has asked the Components Division to provide it with a new part, A15. Production data related to A15 are as follows: Units needed by Business Products Division Variable production cost Allocated fixed production cost Unfortunately, producing the new part requires the same production team within the Components Division that manufactures another part, X32, for outside customers. Data related to the production and sale of X32 to outside customers are below: Units currently produced & sold 100,000 units Selling price Variable production cost Variable selling cost Allocated fixed production cost 20,000 units $31 per unit $3.50 per unit per unit $70.00 per unit $52.00 per unit $8.00 per unit $2.00 per unit Q. If the NSTSYN867's Components Division must reduce the production of X32 by 18% in order to produce…
Whiteside Corporation manufactures a variety of appliances which all use Part B89. Currently, Whiteside Corporation manufactures Part B89 itself. It has been producing 11,000 units of Part B89 annually. The annual costs of producing Part B89 at the level of 11,000 units include: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost Answers: $3.30 $8.50 All of the fixed manufacturing overhead costs would continue whether Part B89 is made internally or purchased from an outside supplier. Assume the company can purchase 11,000 units of the part from the Nadal Parts Company for $20.10 each, and the facilities currently used to make the part could be used to manufacture 11,000 units of another product that would have a $9 per unit contribution margin. If no additional fixed costs would be incurred, what should Whiteside Corporation do? Selected Answer: Make the new product and buy the part to earn an extra $8.30 per unit contribution to…
Zek Ltd assembles heavy industrial switchboxes. Hitherto, Zek Ltd has assembled only onetype, but recently a decision was made to expand the product range into two types. Thefollowing data pertains to each switchbox:Existing product Z 686 (R) New product Z797 (R)Selling price per unit 8 000 6 800 Variable costs per unit: - Direct materials 6 000 5 600 - Direct labour 500 400 - Manufacturing overhead 500 200Specific fixed costs per day 10 000 5 000Zek Ltds total general fixed costs per day amount to R27 000. The organisation operates its factory 24 hours per day and this equates to one operatingcycle. Each switchbox goes through two processes, namely assembly and testing. Thenumber of units which can be assembled or tested in one operating cycle is as follows:Assemble TestZ686 2 6Z797 6 3Zek Ltd is limited to 600 assembly hours and 400 testing hours in one operating cycle.Management is anxious to ascertain the following, but are unsure as to how to determinethese factors: 1. The most…
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Porter Division is part of the Hurry Group. It produces a machine spare part at a cost of $20 which is then transferred to Hermy Division within the group which has additional costs of $10. Hermy Division sells externally at $32. The spare part is also produced in other divisions within the Hurry Group and a limited quantity can be purchased from outside the group. Hurry Group has a policy of transfer price at cost plus 20%. Question: Analyse the result above and problem arise on the current transfer pricing method used by the company.
Decorative Doors Ltd produces two types of doors: interior and exterior. The company’s costing system has two direct-cost categories (materials and labour) and one indirect-cost pool. The costing system allocates indirect costs on the basis of machine-hours. Recently, the owners of Decorative Doors have been concerned about a decline in the market share for their interior doors, usually their biggest seller. Information related to Decorative Doors production for the most recent year is as follows: Particulars Interior Exterior Units sold 3200 1800 Selling price $125 $200 Direct material cost per unit $30 $45 Direct production labour cost per hour5 $16 $16 Direct production labour-hours per unit 1.50 2.25 Production runs 40 85 Material moves 72 168 Machine set-ups 45 155 Machine-hours 5500 4500 Number of inspections 250 150 The owners have heard of other companies in the industry that are now…
Required information [The following information applies to the questions displayed below.] Performance Products Corporation makes two products, titanium Rims and Posts. Data regarding the two products follow: Rims Posts: Direct Labor- Hours per unit 0.40 0.60 Additional information about the company follows: a. Rims require $20 in direct materials per unit, and Posts require $18. b. The direct labor wage rate is $18 per hour. c. Rims are more complex to manufacture than Posts and they require special equipment. d. The ABC system has the following activity cost pools: Activity Cost Pool Machine setups Special processing General factory Annual Production 26,000 units 88,000 units Unit product cost of Rims Unit product cost of Posts Activity Measure Number of setups Machine-hours Direct labor-hours. Estimated Overhead Cost $28,160 $ 164,560 $ 780,000 Estimated Activity Rims 110 2,000 10,400 Posts 90 0 52,800 Total 200 2,000 63,200 2. Determine the unit product cost of each product…
o Company has traditionally manufactured a number of different standard machine parts. It is now exploring an outsourcing decision r several of the parts that it currently produces. Cost information for one such machine part is given below: Variable cost/unit Fixed manufacturing costs (total) Allocated corporate overhead Unit product cost (based on 500 units) $ 31.50 5,440.00 6,760.00 $ 55.90 fty percent of the fixed manufacturing costs are directly traceable to this specific machine part and therefore avoidable. An outside upplier will sell the part at a price of $44 per unit if 500 units are purchased. equired: repare an analysis whether We Make should continue to manufacture this machine part or whether it should purchase it from the utside supplier. (Negative amounts should be indicated by a minus sign. Round "Per Unit" to 2 decimal places.) Purchase ariable cost ixed manufacturing overhead Common costs otal costs hould the company make or buy? O Make ○ Buy 500 Units Per Unit Make…
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Julio produces two types of calculator, standard and deluxe. The company is currently using a traditional costing system with machine hours as the cost driver but is considering a move to activity-based costing. In preparing for the possible switch, Julio has identified two cost pools: materials handling and setup. The collected data follow: Standard Model Deluxe Model Number of machine hours 25,800 30,800 Number of material moves Number of setups 590 890 70 540 Total estimated overhead costs are $347,100, of which $170,200 is assigned to the material handling cost pool and $176,900 is assigned to the setup cost pool. Required: 1. Calculate the overhead assigned to each product using the traditional cost system. 2. Calculate the overhead assigned to each product using ABC.
The machining division of Cullumber International has a capacity of 2,000 units. Its sales and cost data are: Selling price per unit $80 Variable manufacturing costs per unit 25 Variable selling costs per unit 3 Total fixed manufacturing overhead 183,200 The machining division is currently selling 1,800 units to outside customers, and the assembly division of Cullumber International wants to purchase 400 units from machining. If the transaction takes place, the variable selling costs per unit on the units transferred to assembly will be $0/unit, and not $3/unit. If Cullumber's assembly division is currently buying from an outside supplier at $75 per unit, what will be the effect on overall company profits if internal sales for 400 units take place at the optimum transfer price? The company profits would by $
Industrial Robots does not manufacture its own motors or computer chips. Its premium product differs from its standard product in having heavier-duty motors and more computer chips for greater flexibility. As a result, Industrial Robots manufactures a higher fraction of the standard product’s value itself, and it purchases a higher fraction of the premium product’s value. Use the following data to allocate $850,000 in overhead on the basis of labor cost and materials cos